Speaking on Mortgage Solutions TV in association with Accord Mortgages, director of intermediaries Jeremy Duncombe said there were still opportunities for refinancing after the tax break. 

He said the stamp duty holiday was one of the reasons for the performance of the property market but the desire for bigger homes and relocating from the city were additional factors driving demand. 

Duncombe (pictured) said: “I’m really confident that it’s not a stamp duty-driven market, there are lots of other things contributing. I’m really confident for the rest of this year that we’ll still be in a really positive place. 

“In addition, even if the market does quieten off a little bit with purchases, there are opportunities for remortgages and product transfers – where we can potentially argue we’ve been underperforming recently.” 

Kevin Roberts, director of Legal and General Mortgage Club, said it would be a “bumper year” for product transfers, with 770,000 two and five-year fixed terms set to mature in 2021. 

Although he admitted attention given to remortgage and product transfer business dipped, as purchase activity went up, Roberts said upcoming refinancing was “why we’re optimistic of the year ahead.” 

Broker preparation 

When asked if brokers were ready and at capacity to handle the incoming refinance business, Duncombe said intermediaries tended to move with the market and deal with trends as they emerged. 

However, he suggested brokers needed to have a plan as early as possible to handle product transfers and remortgages. 

Andrew Montlake, managing director of Coreco, said good brokers were already doing this. 

Duncombe said: “It’s really important we have these customer contact strategies in place. Having a really good customer relationship management (CRM) system, using the information that’s out there, writing to your customers all the way through, not just in the last three months.   

“The important thing, if the purchase market does subdue slightly, is that you’re not scrambling round at the last minute trying to do those product transfers and remortgages. That you’ve got the actions in place ahead, so your customers are expecting it, and it’s a much easier proposition for them. The last thing a broker wants is for a customer to feel like they have to go direct to the lender.” 

Watch the video below [9:19] hosted by Paula John, editor in chief at Mortgage Solutions joined by Jeremy Duncome, director of intermediaries at Accord Mortgages, Kevin Roberts, director of Legal and General Mortgage Club and Andrew Montlake, managing director of Coreco. 

This video was filmed on 16 June, before the tapering of the stamp duty holiday. 

Advisers will also benefit from reduced arrangement fee of 1.75 per cent, down from 2.5 per cent. The procuration fee will also be 0.8 per cent.   

Octane Capital lends to first-time landlords, ex-pats, applicants with adverse credit and foreign nationals. 

Rates for products begin from 4.99 per cent per annum, and have maximum loan to value (LTV) limits between 65 per cent and 75 per cent depending on the product. 

The lender will provide finance on properties with a value between £200,000 and £5m, including complex properties such as homes in multiple occupancy (HMO) and multi-unit blocks (MUBs). 

Danny Belton, head of lender relationships of L&G Mortgage Club: “Through a common-sense approach to lending, Octane Capital has helped many to start and grow their buy-to-let portfolios and we expect that our adviser community will greatly benefit from the exclusive rates we are offering in conjunction with the lender.  

“Its ability to help a wide range of applicants, including those with credit impairments also make it a relevant and timely provider in the post-Covid climate.” 

Mark Posniak, managing director of Octane Capital, said: “We expect these competitive rates to suit a wide range of borrowers, however, a clear focus of our is in helping borrowers who have found Prudential Regulation Authority (PRA) stress tests an obstacle to their property investment ambitions.  

“By removing the need to stress test and instead requiring 100 per cent rental cover, we are opening the door to yet more aspiring buy-to-let landlords in a creative but responsible way. We look forward to continuing to work closely with L&G Mortgage Club and its advisers.” 

Until 30 September, the relief will only apply to properties of £250,000 and under, before returning to the standard threshold of £125,000 on 1 October, alongside the previous duty exemptions for first-time buyers.

With average property prices at an all-time high and now surpassing the new threshold, activity in the market is expected to tail off as savings become less likely. 

So this week, Mortgage Solutions is asking: Will the housing market be noticeably affected by the tapering of the stamp duty holiday? 

Cloe Atkinson, managing director of mortgage technology solution Mortgage Engine 

The stamp duty holiday was introduced and then extended to boost demand following the almost total shutdown of the housing market and this policy seems to have been a clear success.  

There is some concern that a small number of purchases might fall through, and overall demand and transaction levels will drop.  

Certainly, some buyers who might have benefited from the tax holiday might re-think their options, but any idea that we will see a huge fall in activity ignores the fact that the market simply hasn’t been operating as normal for the past year and a half.  

The longer-term economic and societal impact of the pandemic, as well as how the industry continues to respond, will likely play a far bigger role in influencing the future of the housing market. 

As lockdown restrictions continue to ease, more pent-up demand will be released as buyers and sellers who have sat tight come to market. Additionally, the future of where and how many of us will work post-pandemic is becoming clearer and more definite.  

This could mean the ‘race for space’ accelerates. There are also serious challenges looming over the future of the market that go far beyond the end of the tax holiday.  

The end of furlough later this year and the withdrawal of government lending from businesses could have serious ramifications for the finances of potential buyers. As the economic impact of the pandemic becomes clearer, issues of affordability and vulnerability look set to come to the fore. 

The property industry needs to look beyond the end of the stamp duty holiday and ensure that it is prepared to meet these challenges, by investing in the right tech and people, refining capabilities and examining procedures. 

Kevin Roberts, director of Legal & General Mortgage Club  

The mortgage market will certainly be impacted by the tapering of the stamp duty holiday. However, the extent to which it changes the market is still to be seen.  

We know that demand for property is currently being driven by a real range of factors and that means people will still be keen to move, even after the tapering takes effect next month. Many still wish to upsize and relocate and there is also significant demand from international buyers.  

Last month, our SmartrCriteria data showed that advisers searched for mortgages suitable for buyers with visas more than almost any other criteria point. 

It’s also important to remember that we have not seen any significant changes to housing supply or how our housing stock is utilised since the stamp duty holiday began.  

That means competition for homes remains high and at a time where housing availability remains unchanged. We must remain positive that the UK’s levelling up agenda will help to change this, but for now, unless there is a big shift in housing supply or usage, stable price growth looks set to remain. 

Many have been quick to predict cliff edge disruption when the stamp duty holiday draws to an end, but we’re more likely to see a more gradual return to normal market conditions.  

For now, while mortgage rates remain extremely competitive, it continues to be a great time for people to borrow. 

Jonathan Stinton, head of intermediary relationships at Coventry Building Society  

It’s unlikely that the 1 July will bring as big a ‘cliff edge’ as many in the market previously feared, thanks to the taper. 

However, there will undoubtedly be many disappointed borrowers who are unable to complete ahead of the deadline and whose tax bill will be higher than planned – the cliff edge was simply moved and a different set of purchases are now affected.

It’s worth noting though that what we’re seeing is a gradual return to a normal level of stamp duty, so any discount is an added bonus. 

For intermediaries, it’s vital that they continue to plan ahead to help their customers both in the short-term and after the tax break ends – the Covid-19 pandemic has changed working patterns for many, and their housing requirements have changed to match, with many now able to look further afield than before.  

Brokers who have maximised alternative streams of business, stayed in touch with existing clients, and who haven’t relied on stamp duty holiday-fueled activity to survive will be best placed to carry on their success through the rest of the year and beyond. 

The remortgage and product transfer market in particular could offer a strong source of business for many this year, due to a high volume of product maturities on the horizon.  

Being there to advise clients and help them get the best deal will mean that a broker’s services remain in demand. And we shouldn’t forget that house purchases will continue, even if at a lower level. As ever, advice will be crucial, especially for first-time buyers and the self-employed, and it’s there that brokers can really make a difference to borrowers. 

Speaking on a video debate hosted by Mortgage Solutions, in partnership with Pepper Money, the mortgage club’s head of lender relationships said customers researched options online and panicked when calculators showed they would be rejected for a mortgage. 

Pepper Money’s recent adverse credit study found that while 52 per cent of adults wanting to purchase a home in the next year were worried about being rejected for a mortgage, just six per cent of those who actually applied were turned down. 

Belton said: “I generally think there is a role for intermediaries to become more visible. And be more visible in channels that customers actually use on a regular basis. Whether that be the likes of Facebook or other social medias.” 

He said people would usually speak to family and friends about their credit worries and then be referred to mortgage brokers who could help. However, with people being less connected due to the pandemic, Belton suggested brokers position themselves on online platforms where concerned clients may be. 

“I do believe online channels are the first port of call. This then leads to brokers having good quality websites,” he added. 

He said updated web systems also helped brokers to keep in touch with existing customers who may have had a change in circumstances by asking them how they were and if they needed help.  

Paul Adams, sales director at Pepper Money, acknowledged there was a lack of understanding amongst consumers. 

“It’s the very reason why we do the adverse credit study. We want to promote this by social media channels, we take it to the national press as well for coverage. 

“It’s a perception gap. People are very embarrassed to talk about credit issues,” he added. 

Watch the video below [6:38], chaired by Victoria Hartley, group editor of Mortgage Solutions, featuring Paul Adams, sales director, Pepper Money; Stephanie Charman, head of strategic relationships, lender, Sesame Bankhall Group and Danny Belton, head of lender relationships, L&G Mortgage Club.

At the broker’s request, L&G created a bespoke integrated affordability tool that sits on the My Simple Mortgage website.

L&G said it was the first time it had used its tech capabilities this way.

It will use customer’s financial information, such as earnings and expenditure, to give them an indication of how much they could borrow while eliminating results from lenders that would not offer deals based on the borrower’s circumstances.

Users will then be put in contact with a My Simple Mortgage adviser to discuss their borrowing options in more detail.

My Simple Mortgage approached Legal & General with its need for an intuitive affordability calculator which borrowers could use to find out how much lenders would offer them.

Clare Beardmore, (pictured) head of digital transformation, Legal & General Mortgage Club, said: “Technology is continuing to revolutionise the mortgage industry, whether it’s helping advisers with time-saving solutions that allow them to focus on actually advising or enabling borrowers to make their lives easier when finding a new mortgage.

“Marrying the two, however, can benefit all parties and it’s why we’ve worked with My Simple Mortgage to create a bespoke affordability tool for its customers, helping identify what they may be able to borrow before they then speak with one of their qualified advisers.”

She added: “Using our tech capabilities in this way is a first for us and we’re keen to explore how we might work with other partners to develop practical, time-saving solutions that benefit advisers and customers alike.”

Director at My Simple Mortgage James Adams said the question they got asked the most by customers was ‘how much can I afford?’.

“We’re expecting this process to save all parties time and effort, helping us spend more of our energies on our business while ensuring that we find even better outcomes for customers,” he added.

Just 13 per cent of borrowers see early repayment charges as a serious consideration despite the risk of facing penalties that run into the thousands of pounds.

The mortgage club looked at a scenario where a borrower with a £250,000 mortgage had chosen to lock into a five-year fixed rate. If the borrower decided to move or remortgage early, they could face charges of up to £10,891.

Kevin Roberts (pictured), director, Legal & General Mortgage Club, said: “The crisis has taken its toll on the finances of people across the UK and many are now looking for ways to keep their household bills to a minimum.

“A great place to start is with a mortgage as this is normally people’s biggest monthly expense. So, reducing its interest rate down can only be a good thing, right? Well, our latest research shows why it is also important to look beyond the headline rate and consider other factors, like exit charges. Not doing so could mean having to pay thousands in unexpected costs when it comes time to move home or remortgage.”

The system which is used by over 8,000 advisers found enquiries for products to suit borrowers with a satisfied default rose 40 per cent since February. This indicated that more people who recently paid off arrears were looking for mortgage options during the month. 

Meanwhile, products for those with outstanding missed payments increased 28 per cent. 

People appear to be taking on more jobs to increase their income too. Searches for applicants with a second job jumped 51 per cent, the data showed. 

Additionally, those on a reduced income still required options. While searches for furlough-friendly mortgages fell nine per cent month-on-month, it was the second most sought for criteria in March. 

Clare Beardmore, head of mortgage transformation and operations at Legal & General Mortgage Club, said: “While it is clear that various government incentives are driving many to push ahead with their homeownership plans, the rising number of searches for lenders who will accept applicants with credit impairments and multiple income streams shows that the economic impact of the crisis continues to be felt by many.” 

However, looking beyond some of the initial headlines, maybe the most interesting point is that Habito has come to market with a product it is distributing and manufacturing — broadening this model beyond buy to let where it already has a product and proposition live.

Could this be the start of a bigger shift in the way mortgages are underwritten and sold in the future?

Industry parallels

It is not altogether uncommon to see distributors moving up the value chain. In general insurance, Managing General Agents (MGAs) are estimated to control about 10 per cent of the UK insurance market.

MGAs are essential distribution organisations or insurance brokers, acting as wholesale insurance intermediaries who have the authority to underwrite, accept placements, bind cover and in certain instances even manage claims on behalf of insurers.

In some ways this has revolutionised the sector by ensuring those closest to customers can match them with the best financial products.

There are parallels between the two sectors and there is certainly the potential for the mortgage sector to implement a similar model where intermediaries play a much more involved role in underwriting and placing business.

Involving distributors in lender processes

In the past there have been predictions of the demise or possible disintermediation of mortgages and advisers.

However, in my view, consumer demand for advice and advisers remains strong and recent events may have only increased this need.

For instance, Legal & General Mortgage Club’s SmartrCriteria and SmartrFit tools have recorded a significant uptick in the numbers of searches for products suited to furloughed borrowers and those who have missed repayments.

Maybe then, it is not advisers who are at risk?

Some have argued that product innovation simply has not gone far enough to reflect the needs of borrowers and there may be an opportunity for those closest to customers to drive the change many feel is needed.

And if others follow in Habito’s footsteps then we could see a shift in not only the types of products on offer, but also who is funding them.

All-in-one distributors could transform the way our market operates, potentially ushering in a new wave of ‘lenders’, the likes of which are populated with pension and insurance funds eager to invest in the UKs booming housing market.

An example has now been set and we can expect others to be having conversations about developing their own all-in-one propositions. This could be a space to watch closely.

It is the next step in the lender’s rollout to the broker market which has already gone live with TMA and Mortgage Advice Bureau (MAB).

Members of Legal & General Mortgage Club and users of its SmartrCriteria tool can now access MPowered Mortgages’ range of unregulated buy-to-let products.

This initial offering is available to limited companies, portfolio and individual landlords and includes two and five-year deals up to 75 per cent loan to value (LTV).

Rates start at 2.94 per cent for a two-year fix up to 50 per cent LTV for individual landlords and all deals have a 1.5 per cent product fee.

The funder of this initial £2bn unregulated buy-to-let offering, an unnamed top 15 global bank, requires a physical valuation to confirm the loan.

Last month Emma Hollingworth, distribution director at MPowered Mortgages, told Mortgage Solutions this range would soon be extended to include houses in multiple occupation (HMO).

It also launched a platform for hosting its own and other lenders’ products, where it intends to cover “all the core areas of lending”, once regulatory permissions allow.

And it is working on artificial intelligence (AI) technology with MAB which it hopes will eventually enable its system to begin underwriting cases as brokers are completing client fact finds.

‘Shared vision’

Commenting on the latest agreement, Hollingworth (pictured) said the lender was delighted to be announcing its addition to the panel.

“Legal & General Mortgage Club shares our vision for a tech-enabled future and our commitment to deliver for brokers,” she said.

The addition of MPowered Mortgages will bring the total number of lenders available through L&G’s panel to more than 110 and follows the addition of Habito, West One Loans and Molo Finance, earlier this year.

Danny Belton, head of lender relationships at Legal & General Mortgage Club said he was very pleased to welcome MPowered Mortgages to the panel.

“They are a new entrant to the market but one which is using cutting-edge technology to drive our market forwards,” he said.

“Since the start of the crisis, we have seen how technology can help our sector and it is excellent to offer these products to advisers as in today’s busy mortgage market, the ability to quickly and efficiently make lending decisions will help to counteract delays.”

Research from Legal and General Mortgage Club showed UK borrowers who have seen their income fall due to the Covid-19 crisis could soon pay thousands of pounds more in monthly repayments with one in three borrowers fearful of remortgaging and exposing their finances to affordability checks.

This could impact over 700,000 borrowers who will reach the end of their two and five-year residential fixed-rate mortgages in 2021.

Lender scrutiny

More than half of borrowers who have seen their income reduced as a result of the crisis are concerned that lenders will now be scrutinising their finances in more depth compared to pre-Covid levels.

Half are concerned their decision to take a payment ‘holiday’ will affect their future mortgage options, and two thirds believe it will be harder to get a mortgage when furloughed.

The research showed moving onto a lender’s SVR of 4.1 per cent could increase annual mortgage repayments by more than £2,500 when compared to borrowers on the average two-year fixed rate at 2.65 per cent on a 90 per cent loan to value product.

Meanwhile, 52 per cent of those who plan to move deals say they are likely to stick with their current lender, with over a third of those saying this is the easiest way to secure a new deal.

Kevin Roberts, director of Legal & General Mortgage Club (pictured) said with many people already financially challenged finding value is more critical than ever.

“There are still thousands of great fixed rate-deals available, including furlough-friendly mortgages for those who have or continue to draw support from the government’s Job Retention Scheme.

“The UK also has a thriving specialist lending sector designed to help borrowers with complex circumstances, from the self-employed to those who might have experienced a credit blip, many of whom can only be accessed through speaking with an independent adviser who could help these borrowers to save thousands of pounds in their mortgage repayments,” he added.