Two thirds of buy-to-let, commercial and bridging brokers said they were confident about the lending environment for this year with a similar number feeling positive about the growth of their business.

The Shawbrook Broker Barometer also found there was optimism around the economy in general, as 44 per cent of broker respondents said they were either very confident or fairly confident in the future of the UK’s economic state. 

The market’s bounce back once it reopened last year helped to boost the performance of broker firms too.

A third said transaction volumes were currently up by 20 per cent or more compared to the beginning of 2020. Almost one in ten have seen business increase by 30 per cent or more while three per cent reported annual growth of 40 per cent or more. 

Second charge brokers did not fare as well according to the survey, as a third said business levels were down by 30 per cent or more, and almost a quarter had seen a decline of 40 per cent or more. 

A lack of confidence was also evident in the outlook of second charge brokers with 69 per cent saying they were ‘fairly concerned’ about the lending environment this year.  

Business growth was also expected to be a challenge as 12 per cent of second charge brokers said they were very concerned about their business performance and 42 per cent said they were fairly concerned. 

Just 19 per cent of second charge brokers were fairly confident about their business this year. 

Feelings towards the wider economy were more positive with this group however, as half felt either very or fairly confident about the UK economy. 

Areas of growth 

Increased investment is expected in 2021, as 62 per cent of buy-to-let, bridging and commercial brokers said they predicted investors to expand their property portfolio. 

As for the segments of the market that are expected to do well, 29 per cent forecast the buy-to-let market to experience the strongest growth this year and a further 29 per cent believed they will see a good performance in bridging business. 

Second charge mortgages and semi-commercial investment were respectively predicted areas of growth for 14 per cent of brokers, while 11 per cent predicted the residential market would do well. 

Furthermore, 42 per cent of brokers working in the second charge market said they expected to see growth in this segment and 38 per cent expected increases in residential business. 

Restriction concerns 

Restrictions relating to the pandemic and lending behaviour were common concerns with all specialist brokers as three quarters of buy-to-let, bridging and commercial brokers believing lending restrictions would impact business while 96 per cent of second charge brokers said the same.

The second main concern for buy-to-let, bridging and commercial brokers was valuation issues, with 66 per cent citing this as a worry, while 69 per cent of second charge advisers were worried about Covid-19 restrictions.

Emma Cox, sales director of property finance at Shawbrook Bank, said: “The optimism among brokers, even in the face of enduring uncertainty while we continue to navigate the Covid-19 situation, is great to see.  

“The growth in business volumes when compared to the beginning of last year imply a robust recovery, which is likely to be fuelling the positive outlook for the year ahead.”  

She added: “Despite the optimistic outlook, as we move further into lockdown 3.0, we understand there are still many brokers facing challenges, which is why it remains crucial for lenders to continue to work closely with brokers over the coming months.” 

The lender said it was addressing a need in the market and would allow customers with missed payments and other recent credit issues to apply.

Recent missed mortgage payments are accepted on the full range with additional householder income considered and self-employed customers accepted.

Loan to values (LTVs) up to 140 per cent are being accepted with no previous mortgage history required.

Rates start at nine per cent with no consent required on loans up to and including £50,000.

Evolution said its range offers brokers wider scope to serve clients who have missed mortgage payments during 2020, seen a change in employment status or have had their credit score adversely impacted since their pre-Covid mortgage application.

According to data from Knowledge Bank, advisers have been increasingly seeking second charge options for borrowers with financial issues such as defaults.

Operations director Kerri Pender (pictured) said: “We are pleased to bring this new range of products to the market which we believe are highly relevant for the circumstances in which many borrowers find themselves in during 2021 since the onset of the pandemic last year.

“We have listened carefully to the marketplace and it is clear that many brokers demand innovative and more flexible lending criteria to assist clients raising finance through a second charge product.

“We approved more than 5,000 second charge loans last year and we predict we will see an increase in approvals this year.”

Pender added that she expects 2021 to be a big year for the second charge lending market and that the lender had further developments planned.

Within its Apex 0 range for borrowers with good credit profiles, maximum loans have increased from £100,000 to £250,000 at the 70 per cent loan to value (LTV) lending tier. 

The lender has also cut rates in this range by up to 0.30 per cent at 75 per cent LTV, and five-year fixed rates now range from 4.05 per cent to 4.65 per cent. 

For the Apex 1 products, available to borrowers with a history of credit issues, rates at 75 per cent LTV have been reduced and start from 5.55 per cent. 

At the same lending tier, buy-to-let second charge mortgages have seen reductions of up to 0.50 per cent and start from 5.99 per cent. 

Criteria changes 

West One Loans now only requires a minimum mortgage history of 12 months, down from 24 months. 

Furthermore, the lender will accept applications from borrowers on zero hour contracts and DSS tenants will be accepted on the second charge buy-to-let range. 

Marie Grundy (pictured), managing director of second charges at West One Loans, said: “These changes reflect our commitment to continuing to support the second charge market by providing broker partners with an even more compelling second charge proposition. 

“With more firms and customers adapting to more fluid working arrangements we are confident these changes will help to provide greater flexibility when dealing with West One.” 

The specialist second charge lender counts Tony Marshall as managing director and Chris Payne finance director on the Equifinance Board.

Philip was formerly chief executive of First National Bank, as well as being a founding director of Link Loans and Commercial First Mortgages and Shawbrook Bank.

He said: “I am delighted to be appointed to the Equifinance Board and to have the opportunity to work with Tony and Chris, who have built a really successful secured loan business. I am very much looking forward to helping them take the business to the next level and become a major player in the specialist mortgage market.”

Marshall added: “We are delighted to attract someone with Philip’s extensive experience in the sector. His background and insight will be of particular value to our future progress. We believe that Philip will bring the skills, expertise and wisdom to assist the business to realise its growth potential over the coming years.”

The total finance lent was up 10 per cent from October’s £68m, according to figures from the Finance and Leasing Association (FLA), with 1,857 transactions completed representing an eight per cent uplift.

However, these remained 35 per cent and 41 per cent respectively down on November 2019, which saw £116m lent and 2,594 transactions completed.

Fiona Hoyle (pictured), head of consumer and mortgage finance at the FLA, said: “The level of new business by value and volume in the second charge mortgage market continued to improve in November and the rate of contraction compared with pre-crisis levels continued to ease.

“In the eleven months to November 2020, new business volumes in this market were 40 per cent lower than in the same period in 2019.

“Lenders are continuing to do all they can to support customers during this challenging period. If customers are experiencing payment difficulties we encourage them to contact their lender as soon as possible.”

The impact of the coronavirus pandemic on the market remains stark with barely £200m lent in the three months to November and only £759m lent in the 12 months up to and including it.

This is in contrast to the £338m and £1.24bn lending completed in the three and 12-month periods respectively at the same point last year.

Contrasting figures

Figures compiled by Loans Warehouse have been more positive than those produced from the FLA, although the pair use different sources for their data.

According to Loans Warehouse in November £80m of second charge loans were completed, an increase of £9m on its October volumes of £71m.

And earlier this week the broker firm said it expected the market to be almost back to its pre-pandemic level in the first quarter of 2021.

According to the firm’s index, second charge lending doubled in the final three months of 2020 compared to the three previous, with December totalling £66.8m.

Although this was a £13.4m decrease on November 2020, Loans Warehouse said the figure was only two per cent lower than December 2019.

The 1,672 completions in December were also a 18 per cent decrease on the number in November 2020.

“In a confident sign of how secured charge lending has adapted over the last 10 months, we can now confidently state it’s business as usual in lockdown three for all lenders who were active at the end of 2020 – including several who are even predicting growth at the start of 2021,” it said.

“We would even go so far as to continue to predict that Q1 of 2021 will see lending volume return to pre-pandemic levels as several lenders plan to release new product ranges in January and offer significant pricing decreases.”

Average completion time across the industry dropped to 11 days, it added.

The broker firm uses its own data and that from eight major lenders in the sector to produce its index.

What brokers want

Perhaps surprisingly, despite being an increasingly popular search for advisers according to Knowledge Bank, the proportion of loans being completed for debt consolidation remained unchanged at 74 per cent.

However, the criteria search engine found advisers were most commonly searching for the maximum loan to value (LTV) on second charge products.

This demand has been reflected in the market as more lenders increase the LTVs available.

For example in December, Together increased its maximum LTV to 70 per cent across its second charge mortgage products, the highest equity it has lent to since March 2020.

Rember appointed

Loans Warehouse has also appointed Nick Rember to the newly created role of secured loan operations director, which he will take up on 18 January.

Rember was previously director of operations at second charge lender Prestige Finance, which was part of OneSavings Bank but was closed down prior to its merger with Precise.

He joined Prestige in September 1988 and became operations director in November 2014, two years after Prestige Finance was purchased by OneSavings Bank.

Matt Tristram, co-founder of Loans Warehouse, said: “We’re all excited about Nick’s recruitment. He has great pedigree and will add vast experience in all areas of lending that will help us grow the business over the next few years.”

Rember added: “I have dealt with Loans Warehouse since they were formed and seen them grow to become one of the leading secured loan brokers in the country.

“I am hoping that my experience and knowledge of the secured loans business will help continue to grow the vibrant business that has been built up over the years.”

The changes have been made on the 75 per cent and 85 per cent loan to value (LTV) bands.

At 85 per cent LTV the maximum loan size has increased from £100,000 to £150,000, while at 75 per cent LTV the limit has more than doubled from £200,000 to £500,000.

Shawbrook property finance head of sales Gavin Seaholme (pictured) said: “This is just another step in our ongoing product innovation plans for 2021.

“We are committed to supporting the second charge market and want to give our brokers a wider choice when it comes to assisting clients with larger funding requirements.”

‘Defaults’ and ‘self-employed with one year’s accounts’ have reached the top five searches in second charge, according to criteria sourcing system Knowledge Bank.

The data suggests freelancers are looking to use equity in their home to secure debts or even to redevelop.

Or it could demonstrate the amount that those who are self-employed are struggling and so are looking to release extra capital from their homes to help with day-to-day living costs, Knowledge Bank said.

Matthew Corker, lender relationship manager at Knowledge Bank, said: “The increase in interest in defaults in the second charge market shows there is a trend of those with missed payments potentially looking to secure debt against their property.

“This combined with the interest in soft-footprints and furlough shows there are a lot of brokers working with clients who may be struggling financially.”

Bridging for limited companies

In the bridging market lending to limited companies reached the top five searched terms for the first time since May 2019.

This could be because businesses are looking to cover costs or to redevelop office space.

It might also hint that landlords are using bridging loans to renovate a buy-to-let property, Knowledge Bank said.

‘Heavy refurbishment’ was included in the top five searched terms in the bridging market for the first time since September 2020 – possibly due to the shift towards more home-based working.

Clients may be looking to undertake major redevelopments to add a space for them to work in.

Residential searches

However, November and December were the first months since the pandemic began that maximum LTV was not among the top searched terms in the residential market.

This was most likely due to lender confidence returning, with more 90 per cent loan to value (LTV) mortgages available.

‘Furloughed worker’ and ‘Soft footprints at the decision in principle (DiP)’ stage were in the top five terms.

Corker added: “The market is again shifting quickly in response to the changing environment.

“Confidence has been building with the number of 90 per cent LTV products available increasing in the residential market.

“This confidence may have been due to the approval of the vaccines and it remains to be seen if the latest lockdown will dent this fragile confidence.

“With another lockdown, lenders are certain to continue adapting criteria to keep up with the evolving market. It is now physically impossible for any mortgage broker to keep all the different criteria in their heads.”

The specialist lender has also reduced the minimum loan size on its second charge products from £50,000 to £30,000.

At the same time, maximum loan sizes have been increased on the lender’s commercial finance product range, including unregulated bridging and buy-to-let mortgages to £2m.

The changes follow feedback from brokers, Together said, with more product updates set to follow in the New Year.

Sundeep Patel, head of intermediaries at Together (pictured), said: “The housing market remains strong, with average UK asking prices rising by 6.6 per cent in the year to December, and we’re making these changes in response to the current demand for mortgage lending.

“We have some of the most flexible criteria in the specialist mortgage market and these latest changes will support those clients whose borrowing needs are not met by high street lenders; these could be self-employed workers, or those in employment who’ve had minor credit issues in 2020, possibly caused by the Covid pandemic.

“We’ve listened to feedback from our trusted partners and are pleased to be introducing these new personal finance products to help more brokers achieve the best possible outcomes for their clients.”

Having already taken time away from the business, Cottle (pictured) has decided to make the decision permanent.

Cottle revealed his departure in a heart-felt post on LinkedIn that featured a picture of him holding his daughter Zara’s hand and included the hashtag #cerebralpalsyawareness.

In the post he wrote: “Having been away from the business for a few months helping my wife and being present for our young family at home, I’ve decided to make it a permanent fixture.

“Our eldest daughter Zara has a limited lifespan, and as the clock ticks louder, I have come to understand that the currency of time is more valuable than anything. We’ll be spending our time as a family making special memories during these latter stages of her life.”

Cottle said he felt “extremely privileged” to have spent two decades working in specialist finance with his friends Barney Drake and Benson Yeadon.

Cottle said he plans to continue developing his property business.

Drake, his co-founding partner, will step in to the role of CEO.

Y3S, which is based in South Wales, re-branded to Specialist Mortgage Group in 2017.