Around 15 to 20 of Borro’s key broker partners received a note this afternoon explaining lending on property would be severely restricted.
The lender confirmed it would continue to lend on just first-charge mortgages and cap all lending at 65% loan to value (LTV) and £500,000, which would be targeted at London and the south east.
Paul Aitken (pictured) CEO and founder of the business, said the ‘massive spike’ in demand for bridging remortgages, known as re-bridging, through brokers from major high street lenders a week and a half ago means the firm no longer wants to increase its loan book.
“When you see a massive increase in clean re-bridging loans, which are just three to four months into a nine month contract you have to act. We will review the move in September,” Aitken told Mortgage Solutions.
“I’m sure this is just a blip and not just for our market but the UK economy as a whole and once the uncertainty dies down we will be willing to lend again.”
He said the immense uncertainty from the Brexit vote combined with David Cameron’s resignation as Prime Minister, political bunfights from both parties and a hugely volatile currency situation meant mid-July to August was a good time to ‘take a breath’.
“From the signs we are seeing, there are definitely other lenders who will not just be pausing lending, but doing everything they can to get their loans back in,” he added.
Earlier today, Benson Hersch, ASTL chief executive spoke to Mortgage Solutions’ sister title Specialist Solutions, explaining that many felt the market was experiencing a correction which would have happened anyway.
However, he said he had heard some banks were already considering withdrawing funding and just treading water at the moment.
“It might be a worry for some lenders, particularly those who are fairly new to lending, because they are reliant on bank funding. However, most of our members are well-established and have a wide range of funding lines,” he concluded.