Alternative Bridging eases rates up to 70 per cent LTV; Foundation adds portfolio landlord product
Rates for the products now start from 0.6 per cent.
“We know that cost is always a consideration for borrowers, so we are continually reviewing our offering to ensure that we can continue to deliver the most competitive rates alongside the most impressive service,” said Jonathan Rubins, director at Alternative Bridging.
The rate reduction comes after the lender added a light and heavy refurbishment range for residential and commercial property. It also introduced a 90 per cent loan to cost loan for medium sized residential development earlier this year and has partnered with Nivo to speed up applications.
“We’ve got nearly 30 years in property lending and we know what it takes to deliver the right solution for a client, with cases that are individually underwritten by a team of experts, and a short line of command so decisions can be made simply and swiftly,” Rubins added.
Foundation Home Loans adds no-fee product for portfolio landlords
Foundation Home Loans has brought out a pair of limited edition two-year fixed rate no-fee products to 75 per cent LTV for portfolio landlords.
One of the products will be part of the lender’s core buy-to-let (BTL) range. It offers rates starting from 3.24 per cent, with the maximum loan size £750,000.
The other product has a rate of 3.44 per cent and is for standard houses of multiple occupancy, defined by the lender as having up to six occupants.
Both products are available for purchase and remortgage to individuals and limited company borrowers.
The rental cover requirement is set at a notional rate of 5.5 per cent. The stress test is 125 per cent for limited companies and basic rate taxpayers, and 145 per cent for all others.
Foundation Home Loans’ commercial director George Gee, said: “We are experiencing sustained activity across the BTL marketplace. These limited edition products provide further options for those portfolio landlords who may prefer a shorter fixed term or are looking to finance a specialist property type.”
He added that upfront costs could be a real problem for landlords, especially for those wanting a competitive rate, and said that the no-fee products would provide greater flexibility.
Starling Bank’s acquisition of Fleet has removed the glass ceiling – Young
Speaking with Specialist Lending Solutions, Young said it was already doing well without Starling’s investment, but the funding would allow it to go beyond its current limits.
He said the buy-to-let lender’s goal was to lend up to £2bn a year.
“Last year we lent for only two-thirds of the year and did £420m. This year we’ve hit £400m without Starling’s help at the halfway point. We’ll come in at around £800m — all of that will be primarily without Starling’s help.
“Our natural limit was about £700m a year, with Starling we see an opportunity to go £1.5bn, possibly £2bn a year,” Young said.
He said the lender’s ambition to reach that target would be set in motion by the end of this year, as its current securitisation phased out in autumn.
Young added: “If we don’t hit £1.5bn by the backend of 2022, I’ll be very surprised.”
Changes at the lender
Young said the acquisition also meant Fleet could diversify its offering, as forward flow agreements tended to result in loan books being homogenous as investors want the notes to be similar.
He also said being funded by a bank would give Fleet access to the government’s term funding scheme. This would mean if another financial crisis was to happen and the securitisation market dried up, it would be able to continue operating.
“This gives us continuity of lending which is brilliant,” Young said.
He also said the access to cheaper funding would allow the lender to develop better priced products.
Young said: “There won’t be any great changes in terms of products until we have funding solely from Starling which will be in September.
“Our products are mid-range at the moment, there’s a bit of scope in the short-term but that’s to be agreed with our funders. Once we are funded solely by Starling, then the market can look forward to Fleet being up close to the top of best buy tables.”
Although management and the running of the lender will remain the same, Young said the acquisition will also give Fleet’s employees the chance to grow in their roles and gain more responsibility.
“They will expand to meet the business volumes that we write. We’ve got people we’ve worked with for 15 or 20 years, who joined us from CHL Mortgages and they are really high quality people.
“The acquisition by Starling takes away a bit of a glass ceiling. Because if you’re bumping along at £700m a year, there’s no real growth for individuals, they will be doing the same thing year in, year out.
“If we increase the figures, we increase the number of staff and increase opportunities,” he added.
Room to grow
Young said Fleet would be focusing on buy-to-let lending as it had done since its establishment seven years ago.
However, he hinted the industry should anticipate an expansion into new segments of the mortgage market, of which Starling would be supportive.
“First we want to increase our share of the buy-to-let sector,” he said.
Young suggested there was scope to grow further in buy-to-let, due to changing investor types, and the maturing of fixed terms following landlord tax changes.
He added: “I don’t know how many times I’ve read over the last 20 years about the death the private rental sector and that buy-to-let is a walking corpse, it’s simply not true. In the emergence of new types of investors, we’ve done away with dinner party landlords. We’re now seeing more thoughtful investors in buy-to-let.
“We see the market as quite buoyant.”
CHL Mortgages joins NACFB as patron
Founded in 1992, the NACFB is an association for commercial finance brokers and lenders which provides professional expertise, helps set industry and regulatory standards and secure engagement from stakeholders to support commercial finance providers and businesses that need it.
The association has around 2,000 commercial finance brokers as members and works with multiple lenders who act as patrons for the organisation.
Being a patron gives lenders access to data on the broker members and allows them to target specific markets and locations.
CHL Mortgages’ commercial director Ross Turrell (pictured) said: “Becoming a patron of the NACFB was high on the agenda when we planned our return to the buy-to-let market and now seems like an opportune time to officially cement this after a hugely successful first few months and our processes firmly bedded in.
“CHL’s proposition is all about competitive pricing and broad criteria, aligned with a modern digital infrastructure to create a positive experience with tangible benefits for our intermediary partners.”
NACFB’s chair Paul Goodman said: “The association looks to partner only with lenders which can add value to our membership and who are doing their bit to keep moving Britain forward.
“CHL Mortgages’ offering is a good fit for our members, particularly those looking to source solutions for clients with specialist buy-to-let financing requirements.”
CHL Mortgages returned to buy-to-let lending in May this year, opening its closed-book status after 13 years.
Since then, it has hired firmer Fleet Manager and a trio of business development managers and been added to Dynamo, Tenet and MAB’s lending panels.
It has also decreased rates on 75 per cent loan to value (LTV) and 65 per cent LTV products.
Starling Bank acquires Fleet Mortgages in £50m transaction
This is the first acquisition by the bank and means Starling will become the sole funder of future originations for Fleet Mortgages.
Fleet Mortgages will gain access to Starling’s deposit customer base through the deal.
The specialist lender has originated £2.3bn of mortgages to date and has reported no credit losses. It currently has £1.75bn mortgages on its loan book.
Fleet’s management team will still run the lender and daily operations remain unchanged.
The deal marks Starling’s entrance into the mortgage market. The deal is also part of the challenger bank’s plan to expand its lending through mergers and acquisitions and forward-flow arrangements, where it will purchase loans originated by other providers.
Bob Young, chief executive at Fleet Mortgages, said: “We are very pleased to be announcing the acquisition of the business by Starling Bank which will deliver a significant benefit to our company, our intermediary partners and their landlord clients, particularly in terms of reduced cost of funds providing us with the ability to deliver highly-competitive products.
“It is certainly exciting times ahead for everyone associated with Fleet and, with new, ambitious shareholders on board, it allows us to potentially move into new product sectors and further grow our market share. This acquisition opens up a range of opportunities that otherwise wouldn’t be available to us.”
Young added: “This is a natural progression for our lending business, with both Starling and Fleet sharing a very similar cultural fit and provides us with a very strong lending base from which to work from and to deliver for our staff, our adviser partners and our landlord customers.”
Anne Boden, CEO of Starling Bank, said: “The acquisition of Fleet Mortgages is the start of our move into mortgages as an asset class and builds on a number of forward-flow arrangements that we’re doing with leading non-bank lenders.
“Fleet’s existing management team will remain in place and Fleet will continue to operate as a stand-alone company, keeping the original name and brand. We’re buying Fleet because it is very good at what it does, not because we want to change it.”
Starling Bank was advised by Rothschild and PwC as its financial adviser and TLT as legal counsel. Fleet Mortgages enlisted West Hill Corporate Finance as financial adviser and Humphries Kirk as its legal adviser.
CHL Mortgages reduces rates; Precise Mortgages releases larger loan products and raises LTV
The five-year fixed option for individuals and limited companies will now begin at 3.10 per cent, down from 3.25 per cent.
Its two-year fixed deal for individuals and limited companies now stands at 3.15 per cent, a decrease from 3.30 per cent, and the five-year fixed rate with a one per cent arrangement fee has gone from 3.45 per cent to 3.30 per cent.
Its two-year fixed product for houses in multiple occupation (HMO) and multi-unit freehold block (MUFB) borrowing will start from 3.39 per cent, a reduction of 0.15 per cent.
The lender’s five-year fixed rate for HMO and MUFB at 75 per cent LTV has decreased from 3.64 per cent to 3.48 per cent.
Its five-year fix for HMO and MUFB borrowers at 75 per cent LTV with a one per cent arrangement fee is now priced at 3.68 per cent.
The lender has also reduced the arrangement fee for its five-year fix for individuals and limited companies at 65 per cent LTV to one per cent.
The interest coverage ratio will start at 125 per cent of the mortgage payment and is calculated at payrate for all five-year fixed purchase and remortgage products.
CHL Mortgages’ commercial director Ross Turrell (pictured) said: “We’ve seen positive movement in the markets with long-term swap rates improving and so have moved quickly to pass these savings onto landlords through our intermediary partners.
“The buy-to-let marketplace is hugely competitive and it’s important to outline our product and service values on an ongoing basis. Passing on these savings – alongside no loading on our valuation fees – demonstrates our commitment to promoting transparency throughout our proposition. Attributes we will continue to build on in H2 2021.”
Precise Mortgages brings in larger loan products and raises BTL limits
Precise Mortgages has reintroduced its maximum 80 per cent LTV limit to buy-to-let lending and brought out a pair of limited edition larger loan products.
The 80 per cent LTV limit applies to two and five-year fixed mortgages, with rates starting from 3.79 per cent, a two per cent product fee and a refund of valuation fee.
The lender has also brought out two limited edition five-year fixed products aimed at customers searching for larger loan sizes.
Rates start at 3.34 per cent and a product fee of £1,995 is applicable for loans between £200,000 and £500,000. The fee for loans between £500,000 and £1m stands at 0.5 per cent.
The BTL range also permits top slicing on personal ownership, limited company, portfolio and HMO applicants, which allows them to use surplus portfolio or disposable income as proof of resilience against financial stress.
Precise Mortgages also allows landlords up to 20 BTL mortgages with a combined value of £10m.
Precise Mortgages’ group sales director Adrian Moloney said: “As a leading specialist lender, we’re pleased to reintroduce up to 80 per cent buy-to-let LTV limits which are designed to offer increased product choice for landlords.
“We’re also pleased to be able to support the larger loan market by offering landlords a choice between a fixed fee product for loans up to £500,000, which may appeal to those with a limited company set-up, or a low percentage fee product for loans up to £1m.”
Foundation Home Loans and The Mortgage Works expand BTL offering
The products are limited edition and have no product fee, no application fee and come with one standard valuation.
The first product is available at 3.24 per cent with a maximum loan of £750,000 and is part of the lender’s core F1 range.
The second product has a rate of 3.44 per cent, and also has a maximum loan size of £750,000, and is aimed at landlords borrowing against standard houses of multiple occupancy (HMO) of up to six occupants.
They are both available for purchase and remortgage, while individuals and limited companies are eligible.
The rental cover requirement is at a notional rate of 5.5 per cent and is stress tested for 125 per cent for limited companies and basic rate taxpayers, and 145 per cent for all other borrowers.
Foundation Home Loans commercial director George Gee (pictured) said the products would give portfolio landlords more options, especially if they wanted a shorter fixed term or wanted to finance a specific property type.
He added: “Upfront costs can prove a real issue for some landlords who are looking to secure a competitive rate and can offer especially good value to those purchasing or remortgaging multiple properties.
“By introducing these no-fee products – which include one free standard valuation, no product fee and no application fee – we are aiming to deliver a product range which offers portfolio landlords access to greater flexibility.”
The Mortgage Works brings in limited company products and cuts rates
The Mortgage Works has brought in a two-year and five-year fixed rate limited company mortgages, with free legal incentives, to minimise upfront costs.
Both products have a rate of 3.39 per cent and are available up to 75 per cent LTV. They are both subject to a £1,995 fee.
The products come with free standard valuations and The Mortgage Works will appoint the conveyancer, cover the professional fee and standard disbursements.
The lender has also cut rates for five-year fixes with the limited company option up to 75 per cent LTV going from 3.59 to 3.09 per cent. It has a fee of £1,995 and free standard valuation.
Its BTL remortgage up to 65 per cent LTV has been cut by 0.3 per cent, with rates now starting from 1.59 per cent.
The rates for the lender’s BTL remortgage up to 75 per cent LTV have decreased by 0.4 per cent with rates starting from 1.79 per cent.
Both the remortgage products have a two per cent fee and free valuation and legals.
The Mortgage Works head, Daniel Clinton, said: “There are a number of costs to consider when investing in a BTL property, particularly for incorporated landlords where conveyancing fees can be higher.
“Our new purchase products with free standard legal and valuation fees aim to help minimise upfront costs.
BTL lenders most flexible in market, brokers say
The Mortgage Lender Benchmark by Smart Money People consisted of 597 brokers reporting on 44 lenders across banks, building societies, specialist lenders and lifetime providers.
It found complex buy-to-let lenders were rated 96 per cent for their flexibility.
Mainstream buy-to-let lenders followed, with a score of 87 per cent for their tolerance with mortgage applications.
Lenders across all categories were scored 79 per cent for their flexibility.
Brokers rated the underwriting from complex buy-to-let lenders higher than mainstream, with a score of 50 per cent compared to 32 per cent. The overall average across all lenders was 51 per cent.
However, complex lenders did not do too well when it came to how quickly mortgage applications were processed, likely due to the more intensive underwriting.
This was evident in how brokers rated complex buy-to-let lenders for speed, which was given a score of 29 per cent compared to the 55 per cent rating for mainstream buy-to-let lenders.
Again, potentially due to the nature of these cases brokers said they felt mainstream leaders were easier to place applications with. Mainstream buy-to-let lenders were rated 80 per cent for their ease, while complex lenders were scored 67 per cent.
Jacqueline Dewey, CEO of Smart Money People, said: “It’s clear that brokers realise and appreciate the complex nature of non-mainstream buy-to-let cases and how lenders approach them, especially when it comes to how flexible a lender is willing to be for these cases.
“However a rating of 29 per cent for speed compared to the overall lender average of 58 per cent shows that complex buy-to-let lenders still have room for improvement in their backend processes.”
Brokers expect bridging to be a lead growth segment in H2 – Shawbrook
The lender’s study of 187 brokers showed 26 per cent expected bridging to grow in H2, while 24 per cent said the same for semi-commercial lending and 23 per cent for buy-to-let.
Attitudes towards the market have shifted since the end of 2020. Some 74 per cent of commercial brokers in June said they felt confident about the prospects for growth for the rest of the year, up from 60 per cent in December.
Additionally, 71 per cent of brokers operating in the buy-to-let, bridging and commercial sectors predicted landlords would increase the number of properties in their portfolio in H2.
Investors’ buying patterns appeared to be shifting. Some 44 per cent of respondents said they noticed a change in the types of properties being purchased, with 42 per cent saying this was down to expected yields.
Brokers reported healthy business in general, with 67 per cent saying they had seen a rise in volumes since the start of the year.
Half of respondents had seen growth of 20 per cent or more in business levels.
Gavin Seaholme, head of sales at Shawbrook Bank, said: “In what could have been a really difficult period, a sense of urgency from buyers and sellers has instead created increased activity and higher values.
“Those in a position to diversify or expand their portfolios are not shying away from current opportunities.”
He added: “Bridging has evolved significantly in recent years and is now viewed as an effective financial solution for the longer term. It allows investors to access capital at a much faster rate than through more traditional finance options.
“The popularity of the product, and opportunity for growth, show no signs of slowing. For brokers, it’s important they make clients aware of all possible finance options,” Seaholme said.
Octane Capital tops £100m of lending in a quarter for first time
Octane received 325 applications and completed 166 loans in the three months.
The performance included a 15 per cent rise in the number of foreign nationals among its customers, the steepest quarterly rise yet.
Mark Posniak, managing director at Octane Capital, (pictured) said: “Activity levels have been off the scale. The stamp duty holiday was a driver. And we are seeing high demand from foreign nationals, mostly from outside the EU, who increasingly see UK property as a safe haven.”
The proportion of foreign national borrowers buying properties outside London was 36 per cent in the six months to end of June, up from eight per cent in the lender’s launch year in 2017.
The Mortgage Lender launches holiday and short-term lets product
The five-year fixed product has a rate of 4.16 per cent and the two-year fixed has a rate of 3.67 per cent. Both are available at 75 per cent loan to value (LTV).
The products are open to individual landlords and limited companies with a minimum of one buy-to-let (BTL) property in their current portfolio for 12 months. It is eligible for purchase and remortgage and has a maximum loan value of £1m.
There are no minimum income restrictions, with the lender explaining that lending is based on a “sustainable” assured shorthold tenancy figure. Affordability is available from 125 per cent of payrate for a five-year fixed rate.
The Mortgage Lender sales and product director, Steve Griffiths, (pictured) said: “The holiday and short-term rental market in the UK has been particularly buoyant for a number of years, but especially so since the pandemic cancelled a lot of people’s plans for holidays abroad.
“For established landlords and investors this segment of the market provides an attractive route to diversifying their property portfolios.”
Holiday lets have grown in popularity over the past year as tax benefits, UK holidays and lockdown savings have persuaded would-be investors into the sector and growth is set to continue.