Speaking on a lender panel at The Buy to Let Forum at the AJ Bell Stadium in Salford, Wesley Regis (pictured left) key account manager at Fleet Mortgages said this would be the “year of the remortgage”.
He said: “Remortgage is a big opportunity in the space this year, we’ve got a lot of five-year fixed rate products reaching maturity. Brokers should look at their back books and see if there are customers whose deals will reach maturity his year and find remortgage opportunities for them.”
Marcus Dussard (pictured middle), sales director at Hampshire Trust Bank (HTB), agreed and explained that the larger number of five-year fixed rates coming up for maturity was due to Prudential Regulatory Authority changes five years ago, which brought in higher underwriting standards.
Adrian Moloney (pictured right), group intermediary director at OSB Group, added that product transfers would also be a key opportunity as lenders would want to maintain clients on their books.
He added that as 95 per cent of the buy-to-let market was intermediated, it was vital for brokers to speak to their clients early to maximise opportunities.
“You’ve seen how quickly these fixed rates have moved in the residential market. We’re starting to see that in buy-to-let too now. The five-year fixed rate you probably could have picked up in January is not as cheap as it is now as we sit in April,” he said.
However, Moloney said rates which could be secured today were “still cheaper than what you could have got five years ago”.
“Property prices have gone up, so investors if they want to capital raise, whether that be for home improvements, can still get cheaper rates,” he added.
Dussard added that there were more opportunities in the “specialist areas” such as holiday let, which he said would continue to grow as the staycation boom is expected to remain.
Regis said Fleet Mortgages had seen an uplift in limited company applications over the past few years and that he expected this market to continue.
Moloney added: “It surprised me that this year already we’re still seeing people looking to make the transition from individual name into a company name because I thought most of them had been done over the last few years, so there is still a big market out there.”
Green mortgage innovation needed
Regis said green mortgage products did have lower costs, but they were mostly designed to reward investors who had already bought properties that had an Energy Performance Certificate (EPC) rated A to C.
“That’s a great start point and that direction of travel is correct, but it doesn’t necessarily help all the houses stuck out there listed below at the moment,” he said.
He added that innovation in the green mortgage space would need to focus on improving properties currently below the C rating.
Dussard said that HTB was looking at repackaging a refurbishment product, which gives a customer three months to work on a property to improve the EPC rating of a property.
He added that the lender was also examining giving cashback on valuations if an EPC rating is improved, but was looking at the potential legal ramifications of doing this.
Dussard said HTB was looking at a bridge to term proposition and how it could operate in the space as well, but said it was a “lot more work”.
“It’s about rewarding people for actually moving in from outside of the criteria into that criteria,” he said.
Moloney said there were probably solutions out there already for improving properties which were not badged as green mortgages, and that there were other options customers could look at like further advances, remortgages and other capital raising to improve a property.
He added it was vital for brokers to familiarise themselves with tools in the advice process to show customers what their EPC rating was currently and what their rating could be.
“I think the agenda will grow and there will be more innovation. We’ll see more lenders offering different products and proposition, It may be that you get short-term funding into term where you can evidence it at the exit of the improvements that have been done. This is going to be a fast-moving part of the market, particularly for buy-to-let,” he said.
Upskilling on ‘growth areas’
All the panellists said that in order to take advantage of “growth areas” in the market it was important to upskill and talk to lenders and packagers.
Regis said: “It’s [about] upskilling your own personal knowledge on the growth areas within the buy-to-let market so that when the door does get knocked and the client has some questions, you know the answers and you know who to talk to get more information.”
Dussard added that as a specialist lender, HTB had the ability to “move pretty quickly” meaning it could respond to feedback and change its products at a faster pace, therefore broker feedback was crucial.
“It’s about talking. Talk to us, talk to your packaging firms, talk to anyone about what can come next,” he said.