Specialist Lending Solutions Podcast: ‘This is the type of market where specialist lending can thrive’
In this first edition of the podcast, Specialist Lending Solutions editor Owain Thomas spoke with Octopus Real Estate head of residential D’mitri Zaprzala and Sirius Property Finance managing director Nicholas Christofi.
The pair agreed that with mainstream banks having to retrench their offerings in the current environment, the specialist sector could prove successful, but they added crucial caveats.
“This is exactly the type of market where the specialist lending sector can thrive,” Zaprzala said.
“The specialist lending sector, because it can be more nimble it can move towards areas that need fulfilling, I think the opportunity will be huge.
“There will be pressures on all of us but this is the time for us to thrive rather than to shelter away.”
He added: “This time, more than in a normal world, the need for good advice is absolutely paramount because I think trying to navigate your way through specialist, high street and now government backed sectors is a minefield.
“Good quality advisers are the ones who will thrive.”
Christofi agreed, adding: “The most important thing as an adviser is we’ve got a responsibility to our borrowers and lenders to make sure that they are given the right advice at the moment and it doesn’t become transactional.
“Brokers historically in certain sectors have been guilty of being transactional. For example with bridging – in this particular market, without an exit strategy you are setting yourself up for a big fall.
“We have got a big responsibility as advisers and as lenders to be able to scrutinise how a borrower is going to repay and how a lender is going to get their money back.”
There was also a hint that Octopus was considering a return to the buy-to-let market.
And the pair highlighted an appreciation for the community spirt that had evolved during the pandemic with lenders and advisers coming together to support each other during the tough times.
Landbay refreshes entire buy-to-let range
The buy-to-let lender has introduced a free valuation on its most popular five-year fix, as well as reducing the rate down to 3.65 per cent, from 3.69 per cent.
The deal is available at up to 75 per cent loan to value (LTV) and also comes with free title indemnity insurance.
At the same time, Landbay has cut rates on its other five-year fixes, and its standard two-year rate has fallen to 3.19 per cent, from 3.39 per cent.
The lender has also expanded its range with the introduction of a handful of new 70 per cent LTV products, with rates at the same level as they were at 60 per cent LTV.
And rates have been reduced on houses in multiple occupation and multi-unit freehold block products.
Despite the high levels of demand, Landbay said it is conducting all business, within its service level agreement with most offers being issued within 72 hours.
Paul Brett, managing director of intermediaries, at Landbay (pictured), said: “Over the past month we’ve seen unprecedented demand from brokers and their clients.
“We are always listening to what the market is telling us and as a result we have relaunched our whole product range with lower rates.
“These enhancements, together with free Title Indemnity insurance and free valuations across qualifying cases means that more cases will complete, more quickly, with a significant cost reduction to the borrower.”
Brett added: “Our application process is completely paperless and online, therefore we don’t have any delays in the reviewing of post, because we don’t have any.”
Precise adds limited edition BTL deals and reintroduces credit impaired range
For its limited edition specials, the lender has reduced fees on its tier one range to 1.25 per cent.
Rates start at 3.14 per cent and are available at up to 70 per cent loan to value – with limited company and personal ownership structures accepted.
Landlords with small and large portfolios can apply and the loans can be used for purchases and remortgages, including houses in multiple occupation (HMO), multi-unit blocks and flats up to 20 storeys high.
Impaired credit landlords
Meanwhile, the lender’s tier two range for landlords that have less than perfect credit profiles has returned.
Precise will accept applicants with credit histories that include defaults and county court judgement (CCJs) if they are registered over 24 months ago.
Products are available at up to 75 per cent LTV, with two-year fixed rates from 3.24 per cent and five-year fixes starting at 3.59 per cent.
It includes HMOs, limited companies and landlords with small or large portfolios.
Hanley Economic BS re-enters expat BTL market
Earlier this month, Visionary Finance managing director Hiten Ganatra issued a call for more lenders to enter the expat market to meet the strong demand at present.
This Hanley Economic deal was initially launched in January but was withdrawn in April because of the Covid-19 crisis.
It has an application fee of £299 and a product fee of £500. The minimum loan size is £30,000, with a maximum loan size of £500,000.
Rental income must be received in sterling and achieve an interest cover ratio of 145 per cent at Hanley’s stressed interest rate.
Mortgage payments must be made in sterling from a UK bank account. The property cannot be occupied by the borrowers’ family and applicants must not have more than three buy-to-let properties in total, including unencumbered properties.
David Lownds (pictured), head of marketing and business development at Hanley Economic Building Society, said: “We’re pleased to be back in the expat buy-to-let marketplace with what remains a highly competitive product offering.
“Due to the fact that we can accept applications from 35 countries, we expect this to be a popular option for those investors who are realising the investment opportunities currently presenting themselves across the UK housing market.
“Although there remains a lot of uncertainty in the world, we expect the expat buy-to-let market to remain active as we navigate our way through the Brexit period and we hope this reintroduction will help provide some much needed choice in this product area for our intermediary partners and their expat clients.”
West One parent company Enra completes first securitisation
The transaction comprises a £267.8m portfolio held by West One Loans.
For its initial securitisation called Elstree Funding No.1, Enra said it received substantial demand from pre-placement orders before the deal was publicly launched.
As the group plans to come to market annually as a programmatic issuer, it has held back around £50m of bonds for public sale.
Its programmatic status will mean its bonds are certified from the first issuance, avoiding the need to go through the certification process for each bond, it said.
Overall, the deal was launched and priced within a week.
Emily Gestetner, chief finance officer of Enra, said: “I am delighted to have priced Enra’s first securitisation.
“In a matter of weeks, we have planned and executed a great transaction in challenging market conditions given the backdrop of the pandemic and Brexit.”
She added: “While we are relatively recent entrants to the second charge and buy-to-let markets, our heritage as a specialist lender goes back many years, and I believe the fact we have been trading for over a decade as a prudent, well capitalised and profitable lending business was key to attracting such strong demand for our first residential mortgage backed securities deal.”
Landbay joins Synergy panel
The lender was already on the network’s packager panel but its addition to the lender panel will give Synergy’s brokers access to its range of specialist buy-to-let products.
This will include its products for large homes in multiple occupancy (HMO) as well as products with free title indemnity insurance.
Paul Brett (pictured), managing director of intermediaries, at Landbay, said: “The buy-to-let market has bounced back strongly and HMOs are in particular demand with record numbers of students and a rise in people wanting to live in shared houses as a result of lockdown.”
Piotr Twaits, sales director of Synergy Commercial Finance, added: “Including Landbay on our network panel now ensures our network members also have access to its comprehensive range of products.
“Being able to offer large HMO mortgages at residential pricing will make HMO financing accessible to a wider number of landlords and investors.
“These highly competitive rates are particularly useful at this point in time when some landlords are using the stamp duty holiday to expand their portfolios.”
Cumberland BS increases holiday let mortgages to 75 per cent LTV
The change brings the range back in line with its proposition pre-lockdown.
At the same time, the Cumberland has re-introduced its two-year variable holiday let mortgage product, which had previously been withdrawn in August.
The two-year product is available at 3.54 per cent, joining the five-year fixed rate mortgage at 3.74 per cent.
Simon Whitwham, head of Cumberland business said: “Since the initial lockdown in March, we’ve been focussed on balancing the needs of our existing holiday let customers, a high proportion of whom required mortgage holidays for three to six months, while continuing to serve new borrowers.
“A survey we commissioned suggested 83 per cent of Brits plan to holiday in the UK rather than abroad this year, and 71 per cent intend to plan a UK holiday in 2021.
“Pair this with chancellor Rishi Sunak’s stamp duty holiday announcement in July, and holiday letting as an investment opportunity started to turn heads.
“In August, a surge of holiday let mortgage interest saw us hit record enquiry numbers, and demand remained high throughout September. Withdrawing the two-year products was the right thing to do, to allow us to give our existing customers the best possible service and support during that time.”
Zephyr Homeloans cuts rates and expands reach
The lender has joined the Brilliant Solutions Mortgage Club panel with members able to access all Zephyr’s rates.
Matthew Arena, managing director for Brilliant Solutions, said: “It is fantastic to welcome Zephyr Homeloans to the buy-to-let panel of our mortgage club which will enable our advisers and their clients to benefit from Zephyr’s highly competitive rates and expertise in the buy-to-let sector.”
Following the reductions, rates start from 3.14 per cent for a two-year fixed-rate standard property buy-to-let mortgage and 3.44 per cent for a standard five-year fixed-rate loan.
The lender’s rates for new build and flats above commercial property now start at 3.54 per cent for a two-year fixed rate loan and 3.84 per cent for a five-year fixed rate loan.
Rates on standard properties, houses in multiple occupancy and multi-unit block properties available up to 75 per cent loan to value (LTV) have also been lowered.
The LTV is restricted to 70 per cent LTV on loan sizes between £1m and £1.5m.
Paul Fryers (pictured), managing director at Zephyr Homeloans, said: “We’ve had one of the busiest months in Zephyr’s history, and we are delighted to be able to reduce rates further and help the increasing number of landlords who are looking to expand their portfolios.
“As buoyancy in the buy-to-let market continues, these new rates provide potential borrowers with highly competitive products across a broad range of properties.”
Foundation increases pair of BTL rates
The lender has made the changes to the two 75 per cent loan to value (LTV) deals within its F1 range which is available for landlords with an almost clean credit history.
Foundation increased the two-year fix from 3.19 per cent to 3.24 per cent, and the five-year fix from 3.44 per cent to 3.49 per cent.
The changes apply to both individual and limited company products.
Molo Finance launches HMO offering
The lender recently closed a round of funding and said it wanted to expand further into the buy-to-let market with the £266m raised.
Co-founder and chief executive Francesca Carlesi (pictured) said despite current uncertainty within the market, the lender always intended to launch into HMO this year.
She said: “We did look at it carefully and that’s why for the last few months we’ve been a bit more conservative with the type of products we launch.
“With our selection of borrowers we already apply careful criteria.”
The lender is currently offering two HMO products up to 65 per cent loan to value (LTV), a two and five-year fixed offering for both individuals and limited company applicants.
The rate for the two-year fixed is 3.05 per cent while the five-year alternative has a rate of 3.44 per cent and there is a 1.5 per cent product fee.
Carlesi said Molo compared its products to similar offerings in the market so it could be competitive, and there is a difference of one basis point on the average rate on both of its deals.
The maximum loan size is £1m and first-time landlords with a minimum of 12 months’ experience can apply.
“A lot of people are buying properties right now because of the changes with the stamp duty and so on. At the same time a lot of lenders are limiting what they offer or the houses they lend on.
“We want to be there for customers, and we do see an opportunity to make sure customers can get a mortgage,” Carlesi added.
She also said the lender’s digital, direct-to-consumer proposition also made it an easier option amid physical restrictions and risks around the Covid-19 virus.
Molo primarily relies on automated valuations and only refers to a physical inspection if the initial check fails to confirm the property value.
Carlesi said: “We have a unique window of opportunity now, because the whole market is a little bit stuck in terms of physical proximities. With us they can do it from the comfort of their own home online without incurring any risk.”
Also, the online platform means customers can apply for property finance at times that suit them, Carlesi added.
“The habits are shifting,” she said. “Now [borrowers] know they can go online and get a mortgage at any time, we’re seeing a lot more out-of-hours activity on weekends and evenings.
“Before it would have been concentrated on those moments when people thought lenders were open but right now we’re home 24/7 so it makes a lot of sense.
“Our habits have shifted with regards to when and how people get a mortgage.”