She said due to recent rises in buy-to-let stress testing, which have now hit the seven to eight per cent mark, there will be “pockets where you can’t raise rents in line to meet those affordability issues”.
This could in turn lead to more product switching as borrowers may not be able to switch lenders as easily as before due to stricter criteria and stress testing.
She noted that this could cause further questions for some landlords as to whether the sector is worthwhile and possibly more moves to limited company buy-to-let.
“I think it’s going to be challenging if what we’re seeing playing out today prevails into the next year.”
Ben Williams, corporate account manager at Coventry Building Society, agreed that it was “tough” for landlords at the moment due to rising stress tests, along with increasing interest rates and higher loan to values (LTVs) being harder to attain.
“If landlords decide to either reconfigure their portfolios or maybe dispose of some properties because it doesn’t stack up any more, then these will probably come into the market which could be good for first-time buyers.
“The buy-to-let space will be tough until rates come back down a little bit.”
Private schemes and other products can fill Help to Buy gap
Reece Beddall, sales and marketing director for Bluestone Mortgages, said there were a lot of private schemes in the market that can take over from Help to Buy, which was one of its most popular products.
However, as a specialist and complex credit lender there was “probably a bit of a journey from those private schemes [in terms] of education on [how to work with] a complex credit lender”.
He said it was “exploring different options to try and find the right fit”.
Beddall added that there was still a question about what would replace Help to Buy for first-time buyers.
“If house prices are predicted to go down next year, it’s going to be hard to go knock on the door of funders for 95 per cent funding unless you can get involved with these schemes. So that’s going be pretty critical,” he said.
Harrison continued: “I think in terms of support in the market, this is where it’s really helpful to understand all those more nuanced policy areas that actually can make a big difference.”
She pointed to income boosters, such as joint borrower sole proprietor products, longer mortgage terms, family discounted purchase as well as shared ownership and First Homes scheme.
“There’s quite a lot of breath in terms of how can we help first-time buyers, but we know the next year will be challenging and so we probably need to think again and a bit differently as to what else what else we can do.”
Hard to find ‘concrete evidence’ of parachute applications
Harrison said it was “quite difficult to get any real concrete evidence” on parachute applications, which is when remortgage and product transfer applications are submitted to multiple lenders simultaneously, but she “expected that is happening”.
She added that Skipton regularly looked at its pipeline and had tracker calls with brokers to ask if applications were going ahead and expected to complete.
“What we have seen as a result [of pipeline examination and tracker calls], isn’t a massive level of drop offs which is comforting… from a lender’s perspective.”
Williams added: “I think the difficulty from an admin point of view is you don’t know what’s live in the pipeline and what isn’t. This presents challenges because if you’ve got service issues as it is, then you’re potentially processing more applications than you need to which is a challenge.”
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