Foundation pauses pre-offer apps on withdrawn deals and pulls short-term let offers
The moves follow coronavirus guidelines from the government, suspension of physical valuations and wider market conditions, it said.
Foundation confirmed it is accepting applications from new borrowers on a limited product range up to a maximum 75 per cent loan to value (LTV), although it is unable to instruct valuations.
Addressing a series of questions on its website, Foundation explained it was making the changes to ensure its lending was responsible given the current situation.
“We must lend responsibly. Applicants will now be borrowing in extremely uncertain times,” it said. “Everyone may be directly or indirectly affected by the Covid-19 crisis. We are actively reviewing how we can ensure that we lend responsibly.”
Pipeline cases and product overhaul
The lender’s website said that for products which have now been withdrawn, pre-offer pipeline cases will not be progressed to offer until market conditions have improved.
“The customer may choose to keep the case on hold or request a refund of application fee and a valuation fee (where a valuation was instructed),” the website said.
“Post-offer cases will proceed unless it is a short-term let product.”
Like many other lenders, Foundation is offering a more limited product range for new applications and all rates were increased by 30 basis points on 24 March.
It too is restricting buy to let products to 75 per cent LTV, having withdrawn all short-term let products and it will no longer lend to first-time landlords.
The lender also withdrew several products across the residential range and lowered the maximum LTV to 75 per cent.
Foundation said it was taking the step of pulling short-term let offers as it did not believe it was possible to operate a short-term let property without breaching government guidelines at present.
In a note on its website, the lender said: “For short-term let products, the case will not proceed unless it is a purchase case that has exchanged contracts.
“This is because in the current circumstances, we do not believe it is possible to operate a short-term let property without breaching government guidelines.
“The customer may choose to keep the case on hold or request a refund of application fee and a valuation fee, where a valuation was instructed.”
Mortgage payment holidays
Foundation admitted it was being affected by requirements to offer a three-month payment holiday to borrowers on residential and buy-to-let mortgages, noting it was seeing “very high take up”.
“As things stand today, a borrower may ask for, or require, a payment holiday immediately upon completion,” it said.
“We are seeing a very high take up of the mortgage payment holiday scheme. We are actively reviewing how we can address this situation on a case by case basis.”
It noted that it does not require evidence from borrowers, but it will have a conversation with each customer to understand their circumstances and explore the most appropriate solution is.
Payment holidays will not have a negative effect on the customer’s credit file but it added that a zero-pay three month payment holiday may not be the most appropriate option.
And it is only taking calls to request holidays.
“We do not intend to offer an online mortgage payment holiday facility, as we believe it is important to have a conversation with each customer,” it said.
TML pauses residential applications amid capital markets uncertainty
It is the latest in a line of non-bank lenders to scale back mortgage offerings as a direct result of the coronavirus impact on financial markets.
The lender will continue to accept buy- to- let applications however, as the funding for these mortgages are not dependent on capital markets.
TLM is also exploring further use of desktop valuations (AVMs) in view of the government’s social distancing instructions.
Peter Beaumont (pictured), deputy chief executive of TML, said: “It is right for us to pause residential applications at this time. Our staff are focused on supporting our customers and business partners in the coming weeks.
“All staff are now working remotely and we are collaborating to maintain health and wellbeing as we get used to new ways of working. Our teams are also actively supporting customers who are impacted by Covid-19 at this challenging time.”
He added: We are continuously reviewing our forbearance policies to make sure we are doing everything we can, this includes the option of payment holidays for up to three months, in line with the recent government announcement.
“We will provide regular updates for our customers and partners over the coming weeks.”
Buy-to-let lenders upping rates in uncertain market – Property Master
It came as part of a wider warning that landlords will increasingly struggle to get mortgages as the impact of the coronavirus is increasingly felt across the lending industry.
The firm suggested lenders may not be confident the government’s mortgage payment holidays will provide a sufficient safety net as a reason for the increased rates and margins.
It highlighted this was despite the background of the Bank of England reducing its base rate all the way down to 0.1 per cent, which landlords might expect to mean lower mortgage rates.
“Lenders concerned about the increased risk of tenants defaulting on rents and falling property prices may well choose to widen their margins and increase the cost of borrowing,” it said.
“Some lenders have increased rates despite the 0.65 per cent fall in base rate where margins as a result have increased by about one per cent.”
The broker told Specialist Lending Solutions that it recognised lenders were struggling to price risk and understand landlords’ ability to make payments at the moment.
“It’s most surprising to see lenders widening their margins to price that risk in. It’s very early days and it’s very challenging,” a spokesperson added.
Property Master chief executive Angus Stewart concluded: “In recent years the buy-to-let market has been characterised by increased competition among lenders leading to lower pricing and new, innovative products.
“We are urging the banks now to continue in that vein and support landlord customers as they deal with this really difficult situation.”
TMA grows buy-to-let panel
The decision to add LendInvest is part of the club’s strategy to grow its lending proposition for brokers with landlord clients, the club said.
LendInvest provides finance for new builds, HMOs, multi-unit freehold blocks, high-rise flats up to 10 storeys and ex-local authority flats.
There is also no limit on the number of properties a landlord can have in their portfolio.
Lisa Martin, development director at TMA, said: “Welcoming LendInvest to our expanding buy-to-let panel reiterates TMA’s ongoing commitment to championing landlords and the service they provide to the property market.
“As such, we are thrilled to bring LendInvest on board to ensure that more of our intermediary firms can support their landlord clients with the best lending solutions.”
Earlier this month, buy-to -let specialists Gatehouse Bank joined the panel.
Kensington reduces range to 75 per cent LTV but still accepting applications
However, the lender has been hit by the restrictions imposed upon valuers and others involved in the process.
The lender told Specialist Lending Solutions that it was continuing to accept applications but it would only be able to progress these to the valuation stage at present.
Kensington Mortgages new business director Craig McKinlay said it was an unprecedented time for everyone and that customers, lenders and the wider industry must all work together.
“We’ve decided to remove some of our product ranges to try and protect our customers during this uncertain time,” he said.
“However, we have absolutely no plans to pull our full range and are in a strong position with our funding. We will continue to monitor the current environment and are in close contact with UK Finance to keep up to date with official guidance and industry best practice in these exceptional times.”
On the issue of valuations he added: “We have an industry wide challenge obtaining physical valuations and we are working on a contingency solution which we hope to have in place soon.
“However, in the meantime any new cases will not proceed past valuation until this is resolved.”
Masthaven is still accepting new applications, but did not give any more details about alterations to products or processes.
Vector Capital provides £3.3m for four housing developments
The developments are located in Woburn Sands and Aspley Heath, Bedfordshire.
With a combined value of £10.7m, the properties across four sites feature 13 apartments at Woburn with a gross development value of £6.5m; two semi-detached homes in Aspley Heath with a value of £1.4m; and the barn-style house at Aspley Heath, with a value of £1.3m.
A further detached property site remains land banked, subject to an appeal for apartments, with a current value £1.5m.
The barn-style house at Aspley Heath has just been completed and features four double bedrooms, a detached double garage, gated parking and a rear garden on a 0.3 acre plot. The site was formerly a scout hut.
The development loans were used to finance the four sites and will provide ongoing funding for the construction of the properties.
The loan has been secured against first charges with a 68 per cent loan to value (LTV) over four years.
Agam Jain, managing director of Vector Capital, said: “The development loans were processed in under 21 days from the initial application to the drawdown of funds.
“We are looking forward to working with the group on their future developments.”
Matt Evans, director of Goldcrest Group, said: “We continue to grow in strength due to the flexible funding provided by Vector Capital. We have found them extremely efficient and responsive as our financial requirements arise.”
Castle Trust recruits director of property credit risk
Dabbs has more than 15 years’ experience with SME and property portfolios.
He has held roles at Merril Lynch, Global Home Loans and Amicus Finance, where he was a member of the enterprise management risk committee and group credit committee. Most recently, he worked as the head of credit at Fiducium.
Barry Searle (pictured), managing director of mortgages at Castle Trust, said: “Phil’s appointment as our new director of property risk will give us exactly what we need to continue to deliver our ambitious plans.”
Dabbs added: “I’m really pleased to be joining Castle Trust. Property credit risk is a key element to the continued growth of this business and I have a wealth of experience and expertise that I look forward to bringing to the role.”
ASTL publishes lender criteria guide
The member info hub is available on the trade body’s website.
It includes information such as lending regions, maximum and minimum loan sizes, types of asset and whether or not lenders currently offer second charges, regulated loans, development finance, refurbishment loans and re-bridging.
ASTL chief executive Vic Jannels (pictured) said: “At the ASTL, we have an objective to raise standards and defend the reputation of the short term lending industry, with initiatives like our code of conduct. But we also have an objective to support our members.
“After all, it is in the long-term interest of the bridging industry that those lenders that take a proactive approach to contributing to promoting the sector are also commercially successful.
“The launch of our Member Info Hub is just a small step in supporting our members, but it is one of many steps that we are taking, and it provides an important and useful resource for brokers.”
Roma Finance stops new business due to Covid-19 restrictions
However, the lender said it would be prioritising its pipeline cases through to completion.
Roma said movement restrictions had impacted how valuers can inspect properties and that solicitors working from home were unable to witness and advise on legal charges.
Scott Marshall (pictured), managing director at Roma Finance, said: “The decision is a prudent one at this time but rest assured Roma Finance remains committed to the bridging, development finance and buy-to-let lending sectors.
“We’ll be launching new products to help kickstart the market as soon as the government’s restrictions are lifted.”
These restrictions have seen many lenders suspend in-person valuations until further notice, while Vida has also been forced to stop accepting new applications.
Landbay removes high-LTV deals and introduces two-minute DIP
Landbay has withdrawn its 80 per cent LTV products and will now lend up to 75 per cent LTV, with the lender attributing this decision to a rise in the cost of funds.
However, it will continue to lend across the same range cases including homes in multiple occupancy, special purchase vehicles, multi-unit freehold blocks and other complex buy-to-let.
Last week, Landbay CEO John Goodall wrote in Specialist Lending Solutions that non-bank lenders could face significant issues due to the Covid-19 outbreak with funding markets either almost closed or far more expensive.
Landbay has also sped-up its application process with the introduction of a decision in principle (DIP) which it claims takes two minutes.
The DIP uses technology in line with the paperless application process and the lender said it has reduced mortgage application to completion to nine steps.
It now incorporates a soft credit search and online identity checks, features which were previously part of a separate process.
Landbay used broker focus groups to test the system and recommend changes, with the group ultimately deciding the order and the flow of the process.
Paul Brett (pictured), managing director of intermediaries at Landbay, said: “Brokers are the lifeblood of our business and so they were instrumental in the design of this, in order that we could deliver what they want in the way that they most need it.
“We believe in a hands-on approach to achieve the most appropriate outcome both for the broker and their client.”
To deal with the novel coronavirus and protect its staff, Landbay’s employees have been working from home for over a week.
The lender said brokers could continue to contact its business development managers and underwriting teams as normal and insisted they would receive the same service standards.