Barnard: Bridging growth at Masthaven an unexpected trend of lockdown
The bank has also introduced an income declaration for pipeline customers who submitted cases prior to the outbreak and subsequent economic impact, along with vastly reducing the number of people working in offices as it adapted to the sudden changes.
Director of intermediaries Rob Barnard (pictured) told Specialist Lending Solutions he was cautiously optimistic following an increase in sales over the last three weeks since property market restrictions were eased.
As is typical across the market, Barnard explained the key weeks of lockdown had seen lower business volumes than would usually be expected.
But he noted this was now recovering and Masthaven was able to able to dedicate time to pro-active outbound sales activity and this was gaining traction.
“We’re starting to see green shoots which is encouraging but we have to tread very carefully,” Barnard said, adding that it was good to see lenders opening out into the 90 per cent loan to value (LTV) area.
One of the more unexpected trends to come though this period is a growth in bridging activity at Masthaven, Barnard noted.
“Bridging has remained really robust and we have picked up some business from that,” he said.
“We introduced an automated valuation model (AVM) at up to 50 per cent LTV, were pleased with it and have since increased it to 60 per cent LTV – that has been successful.”
He added that in the unfortunate situation where some lenders had been forced to pause their operations, Masthaven had been able to pick up new deals and relationships.
“It is interesting to see where the support comes from and it’s not always the common brokers – we have seen a spike in new registrations,” he continued.
“I think people normally register when they’ve got a bit of business to write with you.”
And having previously worked at non-bank lender Pepper, Barnard was sympathetic to those lenders that have been hit hardest in the crisis.
“The non-banks have been hit three ways: the securitisation markets have been closed, the cost of funds has gone up, and a good chunk of borrowers might have been hit by payment holidays,” he said.
“We have been able to stay open right the way through, but in non-bank lenders you do have to work to meet funders’ requirements.”
Prudent income approach
As with many others, introducing AVMs was one of the key changes the lender made to navigate the situation – this enabled it to process new applications and also go through its pipeline.
However, given the significant changes over the few weeks, the lender emphasised a cautious approach when underwriting its pipeline, but noted that borrowers were also being prudent.
“We’ve taken a bit more caution with applying the AVM regime to checking income and did introduce a standalone form to check with people,” Barnard said.
“I think people are sensitive in the main and they know that if their finances have been affected is it the right time for them to take on a mortgage?”
As far as practical operational changes and adaptation, Barnard explains that the lender had only moved into new offices in central London towards the end of last year.
This had prompted it to test business continuity plans and other scenarios, which resulted in a serviced office space being introduced in Reading as well.
He says this served the bank well and there are typically fewer than 10 people combined working in these two locations at present, with the whole operation being able to work remotely when needed.
Broker confidence remains
Barnard concluded by discussing the lender’s broker research which found there still remained a decent level of confidence in the market.
Of more than 200 intermediaries quizzed by Masthaven in May, 71 per cent said they were either confident or very confident in the market’s prospects for the next 12 months. A quarter said they were unsure.
The survey also found that half of specialist intermediaries were now using video calls to liaise with customers, while 42 per cent were sending regular email updates.
Only four per cent of brokers have introduced live chat platforms on their websites while just two per cent extended opening hours since the start of the pandemic.
But notably, a third of specialist intermediaries said they were recommending lenders based on their access to reliable funding.
“I think it’s made brokers think about making the most of their business, to make sure their clients don’t go back to the lender direct,” Barnard said.
“I think the confidence is still there, it’s the market that’s been taken, not the confidence.”
Landlords likely to sell as confidence drops to ‘all time low’ – TMW
According to the research, which was compiled using BVA BDRC’s Landlords Panel in April, just 19 per cent of landlords said they felt “good” or “very good” about the next three months.
This is down from the 37 per cent of landlords who felt positive about the following quarter in Q1 2019, and the lowest the measure has been since BVA BDRC first started collecting data in 2007.
More landlords are looking to sell properties than buy, as the research revealed 21 per cent wanted to sell in the next 12 months while 12 per cent plan to buy property.
This is a one per cent decline on the number of landlords who said they would be selling in the next year, and a two per cent drop on landlords looking to make a property purchase.
TMW’s barometer found that landlord confidence in capital gains and rental yields had also reached an all-time low.
Some 15 per cent of respondents said they were confident about their capital gains for the next three months compared to 25 per cent in Q1 2019. As for rental yields, 24 per cent felt confident about the next quarter down from the 46 per cent who responded positively to the question last year.
According to TMW’s barometer, just 16 per cent of landlords have seen an increase in tenant demand while 24 per cent have seen demand decline. Some 33 per cent said they saw no change.
The report was conducted with the responses of 843 landlords between 20 March and 2 April. It asked landlords if they thought the coronavirus pandemic had affected their lettings business.
It was found that eight in 10 landlords had been negatively impacted by the pandemic, with those in London and the South West being the most severely affected.
Some 43 per cent of landlords predicted they will suffer financial hardship following the pandemic, and those who are looking to exit the buy to let market the soonest feel they will be hit the hardest.
Further, the survey found that self-employed landlords thought they would be worse affected with 54 per cent saying the pandemic would have a significant negative impact on them.
Pepper withdraws all products ahead of new range
Brokers have until 6pm tonight (21 May) to secure one of Pepper’s existing deals with a decision in principle (DIP) illustration status.
Full mortgage applications for those cases must be submitted with fees paid by 12pm on 26 May. Pepper will not be able to honour any cases that miss these deadlines, it said.
Full details of the valuation process alongside a refreshed range of products and rates will be available on 22 May.
Paul Adams, sales director at Pepper Money (pictured), said: “Last week’s government guidance enabling surveyors to carry out property inspections means that we are now able to recommence physical valuations in England.
“This means that we can refresh our range to reflect the re-introduction of physical valuations, with products that continue to provide options for brokers to serve their clients.
“As a non-bank lender, we are doing all that we can to support our intermediary partners throughout this difficult period, and we continue to explore opportunities to build our proposition in a way that suits the market conditions and the needs of borrowers.”
Paradigm partners with Paragon Bank
Earlier this week Paragon confirmed it had restarted physical valuations with it’s in-house surveyors.
Portfolio products are available for houses in multiple occupation (HMOs), multi-unit blocks, limited companies and liability partnerships for properties in England, Wales and Scotland.
Portfolio deals are available to landlords with four or more mortgaged properties and for expatriates.
Non-portfolio products, for landlords with up to three mortgaged properties and expats, are available for single self-contained units and consumer buy-to-let customers.
John Coffield (pictured), head of mortgages at Paradigm Mortgage Services, said: “Ensuring our member firms have access to as broad a range of mortgage products as possible is absolutely vital and we are therefore very pleased to be bringing Paragon Bank on board.
“We’re looking forward to working with the team at Paragon and to ensuring our firms have access to its proposition.”
Paragon launched the second phase of its intermediary portal earlier this year which includes the introduction of an alerts service to keep brokers informed as their application moves through the process.
Zephyr restarts BTL lending
The buy-to-let (BTL) lender was forced to pause its applications as a result of the coronavirus restrictions but is now resuming operations with mortgages available at up to 60 per cent LTV with a maximum limit of £1m.
Two, five and seven-year fixed rate products are available with rates starting from 3.19 per cent for a two-year fix with 1.5 per cent product fee.
In a communication, Zephyr said that alongside taking new instructions, it will be working through its pipeline with panel surveyors as quickly as possible and had contacted brokers with applications in progress.
It noted that strict protocols will be followed at all times during the property inspection process to protect the health and safety of the occupiers and the surveyor.
Zephyr added that if a valuer visits a property after a pre-valuation risk assessment has been carried out and the occupier does not comply with the agreed protocol, the valuation will be charged in full even if this could not be carried out.
The lender also noted that it was working to its usual service levels for all types of applications and conveyancing was continuing with solicitors working at home.
Three month offers
For cases in the pipeline prior to 31 March 2020, offers are valid for six months and Zephyr said it had an offer extension process in place.
However, for any new applications submitted from 31 March, the offer validity has been reduced to three months.
Zephyr Homeloans managing director Paul Fryers said: “It’s great news that physical valuations are possible again and that we can now support new customers and progress existing loan applications.
“Now that physical inspections are available, our primary concern is ensuring the safety and well-being of all parties – tenants, valuers, landlord and anyone else on site.
“As a specialist lender, we’re working hard to assess how the funding market reacts to the changes and challenges brought on by the pandemic and will keep our network, packager and broker partners up-to-date on any product changes we make to serve them and their customers better during this difficult period.”
TML reintroduces HMOs and MUBs; LendInvest ups max LTV – round-up
TML has confirmed to Mortgage Solutions that it is now able to conduct valuations on houses in multiple occupation (HMOs) and multi-unit blocks (MUBs).
This has allowed the lender to begin accepting new applications for these property types again.
Last month TML introduced desktop valuations which enabled the lender to consider LTVs up to 75 per cent on new and pipeline cases but certain property types were excluded, including HMOs and MUBs.
TML sales director Steve Griffiths (pictured) said: “We’re delighted that we’re now able to offer physical valuations for HMO and MUB buy-to-let applications in England as the market begins its slow return to a new normal.
“Our team have worked hard to support brokers by offering higher LTV and desktop valuations throughout the crisis, and it is great to see how the industry is working together to provide workable borrowing solutions for buy-to-let landlords while ensuring the safety of our teams.”
LendInvest has updated its buy-to-let product range and increased the maximum LTV to 75 per cent as valuations resume.
Two-year fixed rates start at 2.99 per cent available up to 65 per cent LTV and 3.29 per cent up to 70 per cent LTV, with a maximum loan size of £750,000.
The lender has also reintroduced its five-year fixed rate at 75 per cent LTV product, which will be available at a rate of 3.99 per cent.
Affordability is calculated at an interest cover ratio (ICR) of five per cent against the total gross loan amount, and the lender has adjusted its definition of small HMO to six bedrooms.
LendInvest director for buy-to-let Andy Virgo said: “It is encouraging to see the housing industry start shifting safely back into gear this week, and the team are primed and ready to hit the ground running with this new refresh to our product range.”
Paragon to resume physical valuations; completes £11.8m lockdown deal
The lender said it will initially focus on rescheduling visits that were arranged before government restrictions were put in place and backlog cases.
Paragon said it had begun contacting landlords, brokers and managing agents to ensure they are aware and comfortable with the enhanced inspection processes.
It added that the safety of employees, customers and property occupants was top priority and as a result it was implementing a range of measures to minimise risks during inspections.
Managing director of mortgages Richard Rowntree said the lender was pleased to resume physical property valuations where it was safe to do so.
“We benefit from our own team of experienced surveyors so are well-positioned to resume our operations to pre-lockdown levels quickly,” he said.
£11.8m lockdown deal
Paragon has also completed £11.8m in funding for EquaGroup to assist the purchase of Ironbridge House (pictured) in Hanwell, London and the subsequent conversion into 57 residential apartments.
LEXI Finance brokered the deal covering the 28,000 sq ft West London commercial to residential conversion, which is due to complete in January 2022.
It is the fourth the lender has supported over the past two and a half years, totalling 144 residential apartments.
LEXI Finance co-founder, Nick Holding-Parsons, said the firm was delighted to support the project.
“The transaction became very complex as all parties adapted to the onset of government measures and the response to Covid-19,” he said.
“During this, Paragon not only stuck to their word with regards to the pricing and leverage of the original facility, they also showed great commerciality in the way they approached their decision making.”
EquaGroup director Mike Tivey noted the firm had now worked with Paragon on a number of projects.
“For Paragon to maintain this approach in a period where Covid-19 has impacted lending across the market is a credit to them and demonstrates an understanding that the supply of quality, affordable homes must continue,” he said.
Paragon development finance relationship director Adrian Reeves added: “It’s great to support EquaGroup on another scheme, providing more affordable residential apartments to the market.
“In the unprecedented time we find ourselves in, being able to support our existing and new clients is only possible with the support of our highly-experienced team and professional partners.”
HTB adds desktop valuations on BTL
Restrictions apply to the use of desktop valuations. They are:
- Buy to Let only, no houses in multiple occupation (HMO) or semi-commercial
- No new build
- No studio flats
- No flats in buildings over six floors
- No properties with five or more bedrooms
- No multi-unit freehold blocks
It follows the announcement yesterday that it was returning to physical valuations and increasing the allowable loan to value (LTV) to 75 per cent.
HTB commercial director Alex Upton said: “We have revised our approach to adopt the use of desktop valuations where possible.
“Valuation is such an important issue, and even though the restrictions have been lifted for physical inspections, this additional ability to use desktops provides an alternative as the industry works through the backlog.
“This approach demonstrates our commitment to giving brokers the tools they need to help their clients navigate through a somewhat uncertain property market.”
West One relaunches BTL at 70 per cent LTV and restarts physical valuations
Maximum loan sizes are £250,000, with a maximum property value of £400,000, or £300,000 for flats.
Last week the lender had re-opened up to 65 per cent LTV, with these products still available on loans up to £750,000.
Andrew Ferguson, managing director for West One buy to let, said: “We are keeping a constant eye on market developments at this time and is it pleasing to be able to make some positive changes to support our broker partners and clients.
“The improvement in the valuation position is very welcome news for lenders and brokers and I expect we will see continued growth in activity over the weeks ahead.”
HTB ups lending to 75 per cent LTV as valuations return
The lender is increasing its limit from 65 per cent LTV, but has added further restrictions including loan size and interest cover ratio (ICR) caps for higher LTV levels.
All buy-to-let (BTL), houses in multiple occupation (HMO) and semi-commercial deals are eligible for 65 per cent LTV providing they meet HTB’s standard criteria.
For 70 per cent LTV, there is a maximum loan of £3m, an increased ICR by 10 per cent or six-months’ worth of interest is to be placed on account for the first 12 months of the loan.
The borrower must also have a BTL track record and have taken no payment holidays across their portfolio.
At 75 per cent LTV the maximum loan size is cut further to £750,000 in London and £550,000 nationally and ICR levels have been increased by 15 per cent.
The property must have been used as a rental property recently. New build, heavily refurbished properties and studio flats are excluded.
Cases will only be accepted for purchase deals or minimum capital raise refinances. Onceagain the borrower must have a BTL track record and have taken no payment holidays across their portfolio.
Right properties and borrowers
HTB managing director Charles McDowell (pictured) said: “It is more important than ever that we continually review our lending criteria as more information comes to light.
“With immediate effect we are increasing our maximum LTV to 75 per cent for the right type of deals – the right properties, the right yields and the right borrowers.”
Sales director Marcus Dussard added that the team was excited about introducing the changes and resuming work with brokers.