Foundation Home Loans cuts rates and Masthaven revises bridging range
Across its residential range, the two-year fix at 65 per cent loan to value (LTV) has been cut from 2.99 per cent to 2.89 per cent and the 75 per cent LTV offering has been reduced from 3.29 per cent to 3.19 per cent.
The five-year fix at 65 per cent LTV has reduced by 10 bps to 3.39 per cent while the 75 per cent LTV product has been cut to 3.54 per cent from 3.69 per cent. These products have a £995 fee.
Its fee-assisted remortgages have also seen reductions including the five-year fix at 65 per cent LTV which has gone down from 3.99 per cent to 3.59 per cent.
These products come with a reduced £595 fee, no application fee, a free standard valuation and £250 cashback.
For buy-to-let borrowers, the lowest two-year fixed rate is the deal at 65 per cent LTV which now has a rate of 2.89 per cent, down from 3.09 per cent.
George Gee, commercial director at Foundation Home Loans, said: “We have taken this opportunity to make our ranges even more competitive for both landlords and residential borrowers, by cutting a number of our two and five-year fixes by up to 50 basis points.”
Gee added: “In the residential range particularly, this is an opportunity for advisers who are seeing an increasing number of clients with complex income or multiple income sources, and the self-employed who may have only one-year accounts, to find competitively priced mortgages combined with flexible criteria.
“Landlord borrowers will also benefit from cuts to various products including our remortgage specials, our early remortgage offering, and those seeking large loans.”
Masthaven makes changes to bridging range
Masthaven Bank has revised its bridging range with the addition of refurbishment products and mini bridges.
The refurbishment range includes a heavy refurbishment option with tailored pricing for different projects.
There is also a mini bridge product for loans between £200,000 and £300,000, designed for smaller borrowing amounts which need to be deployed quickly.
Alan Margolis, director of bridging at Masthaven, said: “During the pandemic, bridging has been a vital tool for homebuyers looking to complete purchases quickly, but responsibly.
“As we navigate a third national lockdown and enduring economic uncertainty, adapting our product offering is vital.”
“At Masthaven, we want to respond positively to changes in the market and rising demand. These latest updates to our bridging range will allow us to be competitive in the market and offer great service as we work collaboratively during this challenging time,” he added.
Alternative Bridging Corporation launches 90 per cent LTC product
The product, called Development 90, will be available for new-build schemes, conversions and refurbishments for loan sizes between £500,000 and £3m.
Terms range from six to 24 months and the interest rate is one per cent.
James Bloom (pictured), director at Alternative Bridging Corporation, said: “Development 90 provides secure funding for developers seeking to expand their activities and avoids expensive joint venture structures or reliance on sales from other schemes to finance their equity.
“It is the ideal solution for developers seeking to add an extra project to their portfolio or undertake larger schemes.”
Bloom added: “We want to build ongoing relationships and so we do not hide behind phrases like ‘interest from’ and ‘LTV up to’. Our terms are simple and straightforward – 90 per cent of cost, one per cent per month, with arrangement and exit fees quoted at outset on a case-by-case basis. There are no last-minute changes.”
Together lending falls 60 per cent in 2020
The lending total was £1.3bn lower than the £2.2bn completed in 2019, but the latest set of results show the lender is continuing to rebuild its operations.
Having completed £482m of lending in the first three months of the year, this dropped sharply as the pandemic hit, with £60m completed from April to June, and then improvements to £131m in Q3 and £223m in the three months to December.
And Together noted loan originations continued to increase in January to £104m.
The lender said key modernisation projects were now underway to improve the application process with the intention of increasing efficiency, reducing costs and improving the user experience for customers and intermediaries.
This includes, automating identification and validation, income verification, affordability assessments, asset valuations and enhancements to risk-based product pricing.
It is intending to improve the layout and user experience of its My Broker Venue intermediary platform.
And providing digital document uploads, paperless direct debits and E-Disbursements are also on the cards.
The lender provided mortgage-payment deferrals to 7,800 customers and by mid-February 2.1 per cent of customers by value remained within a payment deferral, down from three per cent in November.
And of the accounts who have exited payment deferrals, 82 per cent have resumed full payments, 14 per cent are making part payments and four per cent making no payments.
Underlying profit up
Overall, the group loan book was £3.9bn in December, down 6.6 per cent compared with £4.2bn a year earlier and down 2.9 per cent compared with the £4.0bn in September as redemption levels remained strong while the group continued to cautiously increase new lending.
Underlying profit before tax was £38.2m in the three months to the end of December, up 4.7 per cent compared with £36.5m in the previous quarter.
Gerald Grimes, group CEO designate of Together, said the lender delivered a robust performance in the quarter to 31 December, as it “remained focused on supporting our customers, protecting our colleagues and shaping our business for the future”.
“Average monthly lending rose to £74.4m as we continued to cautiously increase originations, with the loan book ending the quarter at £3.9bn with a very conservative LTV of 52.2 per cent.
“We remained highly profitable and cash generative, with underlying profit before tax increasing to £38.2m and cash receipts increasing to £430.6m as redemptions continued to be strong during the quarter and, at 8 February, the Group had accessible liquidity of £366m.”
The lender also successfully issued a £500m bond in January to support its funding position further.
“While we expect economic conditions to remain uncertain for some time, with strong levels of capital and liquidity and our modernisation and transformation programmes underway, we believe the group is well positioned to take advantage of future market opportunities and to play our part in supporting the UK’s economic recovery,” Grimes concluded.
Behind the scenes: a look at how lenders coped with payment holidays – Brett
When the government announced last March that borrowers could take a three-month payment “holiday” to cope with the effects of lockdown, it came as much of a shock to many lenders as it did to the rest of society.
Lenders had to digest the news and react almost overnight. But have you ever thought of just what had to be put in place to achieve this?
After all, it’s not as easy as saying “OK Mr and Mrs Smith, off you go then, speak to you again in three months’ time”.
There were systems to put in place to cope with the who, where, when – and what happens to the payments at the end.
Does the mortgage term get extended for example, or do the borrower’s payments increase at the end of the moratorium period?
And what happens if the borrower doesn’t start paying again?
In the buy-to-let world, lenders were also faced with what happens if a landlord asks to take payment holidays across their whole portfolio of properties – and what then if they want to take out further mortgages?
Setting clear goals
While we cannot speak for every lender it may be interesting for intermediaries to understand what had to happen behind the scenes – particularly as we wade through our third national lockdown.
Implementing a new, untried system with everyone working at home for the first time was inevitably challenging.
For larger lenders with legacy computer systems, it must have been a nightmare, especially as these same systems made the challenges of staff home working greater still.
We managed it by setting ourselves three clear goals:
- To implement new processes to facilitate mortgage holidays which mirrored government and regulatory guidelines
- to enable fast, accurate decisions to be made after requests to enter, and later exit, a mortgage holiday
- to monitor mortgage holidays’ performance against the wider industry.
Fortunately, we had the ability to build solutions in-house which enabled our technology to do much of the heavy lifting – our IT team worked around the clock but delivered a facility which met all three goals.
The new system also allowed anyone in the customer service team to create reports and access up-to-the-minute data on our borrowers.
This was vital so we could assess each borrower’s situation and make decisions in agreement with them, always based on what was in their best interests.
With instant access to client data, the customer service team has been able to identify distressed borrowers and make fast accurate decisions on mortgage holidays rather than taking a more blanket approach, which some lenders had to do.
The outcomes from this have been better than we could have hoped.
It meant we were able to provide customers with decisions on payment holidays within 24 hours of receiving the required information and importantly implement the underlying data architecture to support these operations.
On an ongoing basis we have also used technology to support intermediaries and to stay within service level agreements.
Even though these had to be lengthened a little, it has given intermediaries a level of transparency that is essential.
So for those who thought all seemed calm, it is like seeing the swan on the pond – graceful and calm on the surface while paddling like mad underneath.
MFS secures further £200m funding line
The deal comes after a £150m line was announced in January.
MFS said the latest credit line will help it fund larger cases and development exit loans for significant property projects.
“The funding line has been sourced from a leading global hedge fund that has over £10bn in assets under management,” the lender said.
“This latest funding arrangement is part of MFS’ long-term goal of increasing its loan book and expanding its institutional funding partnerships.”
It added: “With enquiries rising, additional funding has been sourced so that loans can be deployed quickly.”
Since its inception, MFS noted it had delivered more than £1.05bn worth of specialist finance loans covering a variety of asset classes, from residential to commercial property.
Paresh Raja, CEO of MFS, said: “This latest funding news is a reflection of the trust and confidence MFS has effectively established over the years with its funding partners.
“By committing to the highest professional standards, I expect our loan book to continue to grow in the coming months.
“Importantly, MFS has delivered over 100 per cent volume growth in the last year despite the challenges posed by the pandemic.”
Together launches limited edition products
The two-year fixed has a rate of 4.29 per cent for capital repayments and 4.79 per cent for interest-only repayments. Meanwhile the fixed-year fixed has a rate of 4.99 per cent for capital repayments and 5.49 per cent for interest-only.
The products will be available at 70 per cent loan to value (LTV) with loan sizes between £50,000 and £500,000.
The mortgage will also be open to the self-employed, freelancers, contractors, those on zero hour contracts and retired borrowers.
The lender will consider applications from customers with county court judgments (CCJs) which have been settled for at least two years as well as those who have paid unsecured arrears up to six months before taking out the new product.
Borrowers who have missed only one mortgage or secured loan payment in the past three years and none in the last year, may also be eligible.
Sundeep Patel (pictured), director of sales at Together, said: “Our new two-year and five-year fixed rate mortgages are designed to give customers who may not fit the mainstream mould more options to make their property-owning ambitions a reality.
“We think it’s important for lenders to offer flexible criteria to increase the choice available in the market and believe there is a strong market demand from would-be customers who may not be able to access mortgages from mainstream lenders.”
Using second charge to avoid conveyancing and beat stamp duty holiday deadline – Grundy
But there is a way to beat the stamp duty holiday deadline by using a second charge mortgage to purchase a property. The type of buyers this could apply to are those who have sufficient equity in one or more properties they own, whether residential or buy to let.
This option could especially appeal to landlords wanting to grow their portfolio and owners of more expensive homes.
By tapping into the equity in their own home and/or buy-to-let properties, landlords can raise money to make another purchase.
Avoid conveyancing delays
The big advantage with second charge mortgages is there are often no post offer conveyancing requirements which means there are usually no delays after the offer has been issued.
With first charge mortgages, customers can often wait weeks for the legal work associated with the purchase transaction to be completed; which as we all know at the moment is being delayed even further due to high demand and Covid-19 restrictions.
But that does not happen as part of the second charge mortgage process because once you have the offer the customer can usually complete the next day.
That is the key difference between a first and second mortgage and where the speed element comes in.
We are seeing more of this type of business, probably because we are one of the few buy-to-let second charge lenders.
After debt consolidation and home improvements, property purchase is the third most common reason for taking a second mortgage in our experience.
Many landlords and homeowners are benefitting from five-year fixed rate mortgages so remortgaging might be costly for them if they want to raise money for another house purchase.
A second mortgage can be a cheaper option but now there is the added incentive of paying less in stamp duty.
High equity homeowners
Using a second charge for house purchase is more prevalent among property investors but we have been seeing homeowners using it to buy another home.
This is becoming more popular since the pandemic started as more people have been working from home and staying indoors.
We have cases of high net worth individuals living in large cities, particularly London, who use a second mortgage to purchase a holiday home in the UK or abroad.
They have a significant amount of equity in their main home which they can tap into and use to fund a second property. There are also clients who are using their main home to fund buy-to-let investments.
For people who have other funds at their disposal, and can demonstrate long-term affordability, a second charge is a way to raise a deposit or use as a top up to complete a purchase.
Of course, all additional properties that are bought for more than £40,000 are still subject to the three per cent stamp duty surcharge.
But buyers purchasing property under £500,000 can take advantage of the current stamp duty holiday – at least until 31 March 2021.
UTB ups maximum bridging LTV
The increase applies to the lender’s whole range of regulated and non-regulated deals, including those for heavy refurbishment and conversions.
Sales director – property intermediaries Mike Walters (pictured) said: “We remained open for business throughout the pandemic, introducing many product, criteria and digital enhancements to help property finance intermediaries write more business.
“We believe the time is right to increase our maximum LTV appetite to support the market even further and you can expect to see more positive changes from UTB over the next few months as we respond to the changing environment and increasing confidence.”
The lender allows loans between £125,000 and £15m on its bridging ranges.
Specialist lender innovation and flexibility will be key post Covid-19 – Jannels
Of course, brokers on the front line are constantly experiencing changes to affordability, availability, criteria and product ranges (especially around self-employment and complex income scenarios) to gain a natural feel for the direction the market is taking.
However, business has been so brisk that it’s easy to get stuck in the present and gloss over issues which are likely to dominate the property market once the stamp duty holiday door is well and truly shut – whenever that might be.
The debate between renting and buying is hardly a modern-day phenomenon but in an increasingly complex mortgage market – and when also taking into account wider economic conditions – there are a growing number of new factors for borrowers and intermediaries to consider.
The pandemic lag
Vida Homeloans research showed that while the data suggested two-thirds of Britain’s rental population aspire to own their own home, it also pointed out that 19 per cent of these renters are now finding it harder than before to purchase a property because of Covid-19.
This includes 20 per cent of renting key workers, who are now having to reconsider their plans to buy.
Furthermore, 28 per cent of those renters who have had to push back their plans to buy, reported the virus has caused a fall in their income, while 27 per cent have had to dip into funds that could have been used to help them buy a home.
In addition, 29 per cent outlined that stricter lending requirements had made it harder to find a mortgage.
ONS data shows that house prices have increased by £20,000 since 2019, with the average property price now sitting at £250,000.
And the research highlighted that, even prior to the crisis, a fifth of renters struggled to find a lender willing to offer them a mortgage, with two in every five saying the biggest barrier to owning a home is being able to save a large enough deposit.
Not banked by Mum and Dad
Staying on the topic of deposits, a report from Saffron Building Society outlined that the majority of first-time buyers are struggling to raise a deposit, despite reports showing a fall in house prices.
It showed that 83 per cent of those currently house hunting had been offered no financial support from mum and dad. Saffron noted that the research arrives as lenders begin to return to higher loan-to-value lending, following product removals in 2020.
The past 12 months have been tough for everyone and this period does seem to have driven an even wider gap between those who can and those who can’t get a foot onto or up the property ladder.
Personal financial situations have been hit by furlough, sudden losses of income and mortgage payment holidays which are all putting some degree of additional pressure on people and families across the UK.
As recently outlined by Steve Seal, managing director at Bluestone Mortgages, when commenting on its recent results – “ultimately, our goal is to continue to deliver innovative and flexible solutions to underserved borrowers across the UK – particularly those impacted by the Covid-19 crisis.”
I’m sure this sentiment is shared across the specialist mortgage markets, and such lenders will prove increasingly prominent when it comes to providing a valuable lifeline for a growing number of potential buyers and homeowners in 2021 and beyond.
Paragon predicts BTL surge and adds pair of remortgage deals
Both new products are five-year fixes at 75 per cent loan-to-value (LTV) with £500 cashback, a free mortgage valuation and are available to landlords remortgaging in their personal names or through their limited company.
The first is suited to portfolio landlords looking to remortgage on single self-contained properties and has a rate of 3.45 per cent with a product fee of 1.50 per cent.
The second is available on houses in multiple occupation (HMOs) and multi-unit blocks (MUB) at a rate of 3.65 per cent with a product fee is set at two per cent.
They include early redemption charges (ERC) of five per cent during years one and two, four per cent for years three and four and three per cent for year five.
Paragon noted that it expected the proportion of buy-to-let remortgage business to grow during 2021 as its research revealed mortgage brokers will switch their attention to the remortgage of five-year deals after the stamp duty holiday ends at the end of March.
The number of five-year fixed rate buy-to-let mortgages increased significantly in the run-up to the introduction of the buy-to-let stamp duty surcharge in April 2016.
Industry data shows that the number of five-year fixed buy-to-let mortgages completed in the six months to the end of March 2016 was 121 per cent higher than the same period in 2015.
As a result, brokers are now planning to focus on this wave of maturing deals.
Moray Hulme, director for mortgage sales said: “The introduction of a three per cent buy-to-let surcharge in April 2016 led to a marked increase in landlords choosing five-year fixed rate mortgages.
“Research we have carried out confirmed our expectation that a significant number of brokers will be looking to support landlords who are in the process of remortgaging now that those five-year mortgages are reaching maturity.
“The launch of our two remortgage products is a timely and useful addition to our range for brokers who are targeting this business.”