More prime borrowers turning to second charge for home improvements – Evolution Money
This was a rise from the nine per cent who went to the lender for second charge loans for the same purpose in the previous quarter.
According to its second charge mortgage tracker, more prime borrowers are using such loans for combined home improvements and debt consolidation, with the proportion of those doing so increasing from 29 per cent to a third.
Those using second charges for the sole purpose of debt consolidation dropped to 43 per cent from 59 per cent over the same period.
The average value of debt was also smaller, falling from £26,657 to £20, 447 in the three months to May.
Quick in and out
Furthermore, prime borrowers were taking out less money and borrowing for shorter terms, the analysis found.
Compared to the previous quarter, the average loan amount dropped from £35,726 to £33,650 with the average term reducing to 166 months from 157 months.
Borrowers also required a lower share in equity for the loan, evident by the average loan to value (LTV) dropping to 69.4 per cent from 77.4 per cent LTV.
Debt consolidation borrowers required slightly larger loans in the quarter to May, with the average loan rising from £20,558 to £21,290.
Meanwhile, typical second charge mortgage terms for debt consolidation borrowers shortened to 125 months from 131, while the average LTV fell from 74.2 per cent to 72.4 per cent.
The share of debt consolidation borrowers using second charges to pay a loan provider remained flat at 49 per cent, while 27 per cent used the money to pay a bank and 17 per cent needed the money to pay off retail credit.
Overall, the share of prime borrowers against debt consolidation borrowers was relatively flat with a respective split of 26 per cent to 74 per cent, compared to 25 per cent to 75 per cent previously.
Steve Brilus, CEO of Evolution Money, said: “Our second iteration of the Evolution Money second charge mortgage tracker shows some similarities with the first, but also a number of deviations, particularly when it comes to prime borrowers and the likelihood they will use the proceeds from their loans for other purposes beyond debt consolidation.
“There’s still no doubting that the vast majority of both debt consolidation and prime borrowers are using seconds to pay off debts from various sources, but the number of prime customers purely using them for that purpose has dropped from 59 per cent to 43 per cent, while home improvement usage has increased.”
“Given the nature of the first-charge market at present, with the huge levels of volumes having to be completed before the end of the stamp duty holiday deadlines, it is perhaps no wonder that many customers are not willing to put themselves into that ‘bun fight’, particularly those who want to keep competitive first-charge mortgages, who don’t or can’t remortgage, but still see the opportunity to use their existing equity to fund home improvements.
“Securing a first-charge remortgage in this situation, with many lenders and conveyancers stretched beyond their capacities due to the huge demand they are facing, is difficult, and given we – as a second-charge mortgage lender – can provide the funds required in a matter of days, it is no wonder many advisers are looking at the second-charge options available. We sense that demand from these sources will continue to grow,” he added.
Investment in existing portfolios will get landlords holiday let-ready – Castle Trust
During a video debate hosted by Specialist Lending Solutions, Robert Oliver, sales director at Castle Trust said those who were upgrading their existing portfolios for the sector were focusing on making properties more attractive.
He said: “As we’re seeing people become more comfortable with holidaying in the UK, one of the things that we have seen people do is they’re capitalising to invest considerably into the property itself to try and increase the value.
“The quality of accommodation is very important. Rightly or wrongly, the swing we have seen as a lender is more away from the standard B&B to self-contained apartments.”
Oliver added: “It’s really important to invest in the quality of what you’ve got, rather than the quantity. That will drive a higher demand but also make it more lettable than other properties.”
He also said it was essential to maximise on the location of the property, its surroundings and the land that comes with it to make it a “home from home.”
Watch the video below [11:06] hosted by Shekina Tuahene, commercial editor of Mortgage Solutions and Specialist Lending Solutions, featuring Robert Oliver, sales director at Castle Trust; Dak Lam, senior associate at Sirius Property Finance and Damian Cain, director of Complete FS.
CHL Mortgages and Furness BS make rate cuts to BTL and holiday let deals
Five-year fixed rates for its BTL products up to 65 per cent LTV will now start from 2.99 per cent and from 3.04 per cent on its two-year fixed products. These are available for both individual and limited company offerings.
Examples include a five-year fixed at 65 per cent LTV for limited companies which has a rate of 3.19 per cent and a 1.25 per cent fee. This is down from a rate of 3.4 per cent.
Its two-year fixed rate for houses of multiple occupancy (HMO) and multi-unit freehold blocks (MUFBs) product which is available up to 65 per cent LTV now has a rate of 3.2 per cent, also reduced from 3.4 per cent.
The products can accommodate for first-time landlords, portfolio landlords and limited companies and cover a range of BTL investment vehicles including HMOs, MUFBs, new build, ex-local authority and commercial properties.
CHL Mortgages commercial director Ross Turrell (pictured) said: “The BTL market remains an extremely competitive lending arena, especially at the 65 per cent LTV level, and the revamping of our product range will ensure that an increasing number of intermediaries will be able to tap into the type of products and service values which will make a real difference for their landlord clientele.”
All the five-year products in the BTL range are available at a payrate and fees start at one per cent. The products have a minimum loan size of £25,001 and a maximum loan size of £1m. The rental income starts from 125 per cent of the monthly mortgage payment calculated at the pay rate.
Furness Building Society reduces holiday let rates
Furness Building Society has cut rates by up to 0.2 per cent on select holiday let products to cater for the growing staycation market.
The rate for its two-year fixed product at 65 per cent loan to value (LTV) has been cut from 3.19 per cent to 2.99 per cent. It is a subject to a £995 fee.
Its two-year fixed for its 75 per cent LTV has been decreased by 0.2 per cent to 3.39 per cent.
The lender has also reduced the rate for its two-year fixed buy-to-let product at 75 per cent by 0.2 per cent to 2.69 per cent.
The lender accepts applications in England, Scotland, Wales and the Isle of Skye and allows the property owners to use the holiday property up to 90 days a year.
Furness’ head of intermediaries, Alasdair McDonald, said: “With the staycation market increasing in popularity we’re sure brokers and their customers will welcome these lower rates which will further increase the rental yield enjoyed by the customer after what has been an incredibly tough 16 months for tourism.”
Landbay launches green mortgage range and lowers large HMO and MUFB rates
An example includes a five-year fixed at 65 per cent loan to value (LTV) for properties with an energy performance certificate (EPC) rating of A/B, which has a rate of 3.15 per cent. This compares to an equivalent non-green product at a rate of 3.25 per cent.
The lender also offers a five-year fixed at 75 per cent LTV for properties with an EPC rating of A/B with a rate of 3.25 per cent. This compares to 3.35 per cent for an equivalent non-green product.
For properties with an EPC rating of C the lender offers a five-year fixed product at 65 per cent LTV with a rate of 3.2 per cent. This is down 0.05 per cent compared to a comparable non-green product.
The provider also offers a five-year fixed at 65 per cent LTV with an EPC rating of C with a rate of 3.3 per cent, which compares to an equivalent non-green product rate of 3.35 per cent.
All the above products are subject to a 1.5 per cent product fee.
All the green rates are available to properties that have been registered for over 24 months with an EPC rating of C or above.
Intermediaries at Landbay’s managing director Paul Brett (pictured) said: “Properties being let by landlords are obliged to have at least an E rated EPC. However, the government has said it wants as many as possible to be upgraded to band C or above by 2030.
“We hope our green mortgage range will go some way to help achieving that goal and incentivize more landlords to consider adding energy efficient properties to their portfolio.”
HMO and MUFB rates lowered by 0.2 per cent:
Landbay has also cut a range of its houses of multiple occupancy (HMO) and multiunit freehold block (MUFB) products by up to 0.2 per cent.
The lender defines large HMOs as houses with seven to 12 bedrooms, and large MUFBs as having seven to 12 units.
The rate for its large HMO two-year fixed product at 70 per cent LTV has been cut by 0.16 per cent to 3.69 per cent, whilst its equivalent product at 75 per cent LTV has been reduced to 3.79 per cent.
On the five-year fixed large HMO products at 70 per cent LTV has fallen from 4.09 per cent to 3.89 per cent, and for 75 per cent LTV its rate has decreased from 4.19 per cent to 3.99 per cent.
The rate for its large MUFB two-year fixed at 70 per cent LTV has been cut by 0.16 per cent to 3.69 per cent, and its equivalent at 75 per cent LTV has been reduced by 0.2 per cent to 3.79 per cent.
Both its five-year fixed for large MUFB at 70 per cent LTV and 75 per cent LTV have been decreased by 0.2 per cent to 3.89 per cent and 3.99 per cent respectively.
Intermediaries at Landbay’s managing director Paul Brett said: “Demand for HMO and MUFB finance has been picking up over the past couple of years as experienced landlords build up and diversify their portfolios.
“These types of property are proving more attractive to landlords as they generate a higher yield than a single dwelling. This is being fuelled by high demand for shared housing and rented property.”
Majority of brokers think bridge to let will allay BTL client concerns
According to a poll of 100 brokers, conducted by Castle Trust Bank and Knowledge Bank, 28 per cent of said their clients had concerns around short-term finance.
The poll also found that 64 per cent of brokers had seen an increase in BTL and holiday let enquiries.
Castle Trust Bank’s sales director Rob Oliver (pictured) said whilst some clients would be hesitant with short term lending due to uncertainty and unknown costs, bridge-to-let could resolve issues.
He said: “Bridge to let tackles these concerns head on, with a pre-agreed exit onto a buy to let mortgage, including the price, at the outset. It’s one application process that offers speed, efficiency, budget planning and peace of mind, so no wonder 90 per cent of brokers agree it’s a great way to beat client concerns.”
Knowledge Bank’s operations director Matthew Corker added: “There’s strong demand from property investors at the moment, and many are looking at more specialist types of investment, such as homes in multiple occupancy (HMOs), holiday lets and multi-units, which offer the potential for greater returns.
“Fortunately, there are lots of innovative options, like bridge to let, which enable investors to make the most of new opportunities, whilst also managing their own risk.”
Paragon provides £25.5m funding to back Watford Riverwell development
The land will be used to develop 85 new homes as part of the Waterford Riverwell scheme, which is a regeneration project in Watford.
Phase one of the scheme will consist of 62 private houses and 23 affordable homes. The development will have a gross development value in excess of £35m.
Overall, the project will take between 15 and 20 years to complete with around 1,000 new homes expected. This will also include a retirement village, primary school, and retail, commercial and industrial space.
Paragon Development Finance’s relationship director Simon Dekker said: “We’re pleased to be working with Kier Property and Watford Borough Council to be part of such an impressive development that will result in a significant amount of new homes and help transform an area in a sustainable manner and with a long-term view.”
Kier Property’s managing director of regeneration Andrew Storey said: “This is an ambitious and impressive development that will regenerate the area from predominantly brownfield land, bringing new homes and facilities and broader economic benefits.
“Paragon has been a key partner, understanding our requirements completely and showing the expertise needed to progress the funding efficiently and within a tight timeframe.”
The British Specialist Lending Awards open for nominations and voting
The awards aim to celebrate individuals in the UK mortgage market and take special care to ensure that all nominees have an equal chance of a win.
The awards process caps nominations from one company to 20 — of the 62 finalists last year, 41 different firms were represented. Finalists are selected using a three-tier process to ensure fairness and independence.
Last year, 19 out of 22 winners were different to the previous year’s cohort, celebrating a wide cross-section of individuals in the sector.
The judging day is 30th September, where finalists will be required for an interview, and the awards will take place on 11th November at Hilton Bankside.
In order to be a finalist you need to campaign for votes by email and social media. Marketing material can be created, please email email@example.com if interested.
To nominate someone visit this link.
Holiday let products will eventually be a high street offering – Castle Trust video
Speaking on Specialist Lending Solutions TV, senior associate of Sirius Finance, Dak Lam, said the market would continue to grow and products “will eventually end up on the high street properly”.
Damian Cain, director of Complete FS, said his firm was noticing a demand for holiday let investment and noted that over the last year, the company’s lending panel for holiday let has doubled to eight.
He said: “We’re getting enquiries every day asking for holiday lets. That was probably something that 12 months ago we came across maybe once every couple of weeks.”
Robert Oliver, sales director at Castle Trust, said in the four months he had been with the bank enquiries for holiday lets had increased by 45 per cent.
He said the sector was ready for expansion and in order to keep growing, it was important for lenders and banks to take feedback from broker partners about what their clients need.
“It can also revolve around the underwriting of cases, the assessment of applicants and making sure that we underwrite correctly,” Oliver added.
He said: “The product innovation work in this part is important but the big message that I’d give to the standard broker, the appointed representative or the directly appointed firm is don’t be scared of it. It’s a new market.”
Watch the video below [10:36] hosted by Shekina Tuahene, commercial editor of Mortgage Solutions and Specialist Lending Solutions, featuring Robert Oliver, sales director at Castle Trust; Dak Lam, senior associate at Sirius Property Finance and Damian Cain, director of Complete FS.
Landbay launches two non-portfolio landlord products and cuts select rates
The new non-portfolio landlord products are a two-year and a five-year fixed at 65 per cent loan to value (LTV), for loan sizes of £100,000 to £1.5 million.
The rate for the two-year fixed is 2.85 per cent, and for the five-year fixed, 3.35 per cent.
The lender also cut rates on its non-portfolio two and five-year fixed rates at 75 per cent LTV. The two-year rate was reduced from 3.14 per cent to 2.95 per cent, and the five-year rate from 3.39 per cent to 3.35 per cent.
The permitted loan size for the non-portfolio deals is £100,000 to £1 million and all are subject to a product fee of 1.5 per cent.
Enterprise Finance completes bridging loan in five hours
The broker sourced an unregulated bridging loan at 0.75 per cent for 12 months for the couple, with Together overseeing the legal work with in-house solicitors Priority Law.
The couple wanted to borrow £145,000 to buy a £275,000 property with a loan to value of 40 per cent.
They had a buy to let property for sale and planned to use the funds to buy a house but were afraid that they could lose the house if they waited for a sale.
Enterprise Finance’s managing director Harry Landy (pictured) said: “With the 20 years of experience that Enterprise has, when we receive a case like this our wealth of expertise coupled with our connections in the market means we can secure a deal at great speed.
He said: “Our client was extremely happy they got the deal they needed with a phenomenal speed of completion.”
Together’s regional account manager Marylen Edwards said: “We pride ourselves on the speed at which we can transact – and the great service we provide – when arranging bridging finance.
He added: “Enterprise were fantastic in providing all the documentation we needed to make a lending decision so quickly. It goes to show how working closely with our key partners can help achieve the best possible outcome for their client.”