TML appoints Peter Beaumont as CEO
Beaumont (pictured) joined the lender in 2017 as its deputy CEO. Trevor Pothecary, founder of TML, has also been appointed executive chairman.
Pothecary said: “Peter has done a fantastic job since he joined The Mortgage Lender in 2017 and continues to provide strong and decisive leadership as we navigate through the current market challenges.”
Beaumont added: “When we announced the anticipated changes to the leadership team in February the world was a very different place. Since then the team at The Mortgage Lender has made me very proud as they have adapted and found new ways of working, like the introduction of remote valuations for buy-to-let applications.
“We are working hard behind the scenes to understand the impact of coronavirus on people’s finances and how that shapes the products and criteria the market will be looking for over the remainder of this year and into next.”
TML increases BTL rates and caps lending to 75 per cent LTV
Rates now start at 3.39 per cent for 70 per cent LTV individual and limited company applications on a two-year fix.
Homes of multiple occupancy (HMO) and multi-unit blocks (MUB) rates start at 3.64 per cent for a two-year fix at 70 per cent LTV.
The five-year fixed rates for the same LTV are 3.65 per cent for individual and limited company applications and 3.75 per cent for HMO and MUB applications.
Peter Beaumont, deputy chief executive of The Mortgage Lender, said the changes made to its buy to let range were in response to “current market conditions”.
He also said TML had made progress in implementing remote valuations and was in the process of developing an end-to-end remote app which would take applications from the offer to completion stage while keeping to social distancing rules.
“Alongside working hard to look after our people and adapt our buy to let products to meet the needs of brokers and their clients, we have been humbled by the resilience and support of our partners during this challenging period,” he added.
The lender paused residential mortgage applications in March due to capital market funding concerns.
TML pauses residential applications amid capital markets uncertainty
It is the latest in a line of non-bank lenders to scale back mortgage offerings as a direct result of the coronavirus impact on financial markets.
The lender will continue to accept buy- to- let applications however, as the funding for these mortgages are not dependent on capital markets.
TLM is also exploring further use of desktop valuations (AVMs) in view of the government’s social distancing instructions.
Peter Beaumont (pictured), deputy chief executive of TML, said: “It is right for us to pause residential applications at this time. Our staff are focused on supporting our customers and business partners in the coming weeks.
“All staff are now working remotely and we are collaborating to maintain health and wellbeing as we get used to new ways of working. Our teams are also actively supporting customers who are impacted by Covid-19 at this challenging time.”
He added: We are continuously reviewing our forbearance policies to make sure we are doing everything we can, this includes the option of payment holidays for up to three months, in line with the recent government announcement.
“We will provide regular updates for our customers and partners over the coming weeks.”
Beaumont promoted to chief executive at The Mortgage Lender
In his new role, Pothecary will retain executive responsibility and accountability, as well as providing “strategic oversight of the business and supporting and challenging the chief executive”.
Beaumont (pictured) joined the lender in 2017 as deputy chief executive and last year witnessed a record performance of the company.
Last month TML reported a 10 per cent boost to its monthly record for decisions in principle.
Founder and outgoing chief executive Pothecary said: “Peter has done a fantastic job since he joined us just over two years ago.
“He has identified new opportunities, differentiated the brand with ‘real life lending’, launched buy to let and overseen exponential growth in lending and the team.
“When we set up The Mortgage Lender in late 2014 the intention was to build a strong sustainable business, we have and continue to do just that.”
Beaumont added: “I’m delighted to be taking on this challenge at a time when the hard work of the last couple of years is paying dividends and The Mortgage Lender is going from strength to strength.
“By adding skills and expertise to the team and investing in relationships with our broker partners we’ve successfully created a niche for our real-life lending ethos by focusing on products that will meet the needs of today’s borrowers.
“We have ambitious lending targets for this year, have started the year strongly and are on track for another record year.”
The Mortgage Lender last year completed its first UK mortgage-backed securitisation of residential assets for £238.5m.
TML adds mortgages for self-employed and cuts resi rates
The RL0 category caters for self-employed borrowers, or those with complex income set-ups, who do not have adverse credit. Rates start at 2.45 per cent.
It also includes a Help to Buy version which starts at 3.2 per cent for a two-year fix at 75 per cent loan to value with a free valuation and £995 completion fee.
Alongside this, it has reduced rates on selected existing deals.
Peter Beaumont (pictured), deputy chief executive of the lender, noted that the RL0 category had been introduced as these borrowers require “increasingly sophisticated and granular pricing options”.
He added: “Reducing rates across our RL1 to RL4 products offers better value in those segments and the introduction of RL0 allows us to combine our experience with competitive rates, and provide a better deal for borrowers that don’t fit the box for high street lenders.”
TML’s Beaumont warns mortgage market must ‘wake up to scale’ of work ahead of Libor changeover – analysis
This gives lenders just under three months to make a decision on which changeover rate to commit to on two-year loans for new mortgage customers.
Speaking to Mortgage Solutions, Beaumont, deputy CEO at TML, warned there may be lenders who have not woken up to the ‘scale of the problem’ suggesting this is potentially a dangerous place to be.
“The message is really clear. The Financial Conduct Authority (FCA) says stop issuing Libor contracts as soon as you can, get on to alternatives, minimise the size of the problem and make sure you’ve got a cohesive executive-led transition plan for your existing borrowers,” he said.
The FCA confirmed it had already engaged directly with the six smaller mortgage lenders issuing Libor mortgages back in 2018, adding: “We strongly encourage mortgage lenders, intermediaries and mortgage borrowers to avoid new mortgage contracts that rely on Libor continuing beyond end-2021.”
Beaumont said in TML’s discussions with the FCA it explained how central mortgage brokers will be to the changeover.
“We’re issuing contracts but they’re recommending the advice to the customer. So, they’re the ones that need to follow the reasons for doing this.
“We want to be able to start educating the advice community on this change. Brokers are going to be issuing or recommending contracts to customers, whatever that may be. There’s a huge education piece here,” he added.
Specialist mortgage lender TML said its transition plans were well advanced and underway for both new and existing customers.
Alternative risk free rates being considered by the industry include Bank Base Rate, Standard Variable Rate and Sterling Overnight Index Average (Sonia), currently the working group’s preferred rate.
The Sonia benchmark is based on actual transactions and reflects the average of the interest rates that banks pay to borrow sterling overnight from other financial institutions.
Mortgage industry impact
FCA figures suggest there are an estimated 200,000 or £30bn of Libor-linked mortgages outstanding in the UK, with four lenders – Foundation Home loans, Pepper Money, Kensington and The Mortgage Lender still offering new customers Libor-linked mortgages, according to a Moneyfacts listing.
Precise Mortgages stopped offering Libor-linked mortgages to new customers in July, swapping to Bank Base Rate (BBR)-linked home loans and is continuing to work toward a benchmark for existing customers.
Alan Cleary, managing director at Precise Mortgages said: “When it becomes clear what index the industry is to settle on we will make our decision. The terms and conditions in our mortgage contracts allow us to use a suitable alternative index in the event of the withdrawal of Libor.”
Precise ran a 12-month project before making its decision and the move to BBR. It considered direct alternatives to Libor, including Sonia, but said despite assessing Standard Variable Rate, BBR ‘fitted its proposition better.’
Cleary said as the changeover only involved new customers, its customer communication strategy has so far involved a change to the European Standardised Information Sheet (ESIS) document and general mortgage conditions.
“We didn’t do any specific communication on this change, it simply wasn’t necessary given how well known this index is. When we move our back book to a replacement rate for Libor, we will communicate the details to our customers directly,” said Cleary.
Brokers already understand BBR and SVRs, he added, so the lender is not planning any further targeted education at this point.
No confirmation yet
The other lenders, Foundation Home Loans, Kensington Mortgages, Pepper Money UK and TML have not confirmed a decision and continue to consult on next steps for new and existing customers.
However, all recent and new securitisations have been linked to the Sonia daily rate.
Jeff Knight, marketing director at Foundation Home Loans said Sonia has replaced the three-month Libor and its funding documentation has always incorporated Libor replacement language as has its mortgage documentation since 1998.
Knight explained: “As yet there has been no guidance from the FCA around replacement measures for mortgages and it is complicated by Sonia being a daily measure, whereas most mortgages are monthly.
“There needs to be transparency around how the rate is set and the current methodology which is an interpolated retrospective rate, so too complex for consumer use. Consequently, we are waiting for the FCA to advise on what needs to be a market-wide move away from Libor.”
Alex Maddox, capital markets director, Kensington Mortgages, said it has been working ‘hard’ on its preparations but that he expects the securitisation markets to be Sonia-linked as standard from now on.
The lender’s latest July-launched Finsbury Square 2019-2 residential mortgage backed securitisation was its first securitisation linked to Sonia.
He said: “The deal saw very strong demand with a number of investors saying they are reticent to buy deals linked to Libor.”
Maddox added that Kensington is due to make a decision imminently on its benchmark rate for its mortgages and will be in touch with brokers as soon after the decision as it can.
“We have undertaken an extensive review of the terms and conditions of the almost £6bn of loans that we have to existing customers and will communicate to those customers about what changes will need to be made to their loans and when that will take place. Our key focus is to make sure that the rate change is fair for customers and clearly communicated.”
Pepper Money UK said it has already set up its own working group to closely follow industry developments and written to customers to explain that alternatives to Libor are being explored.
Paul Adams sales director for Pepper Money UK, said: “We are currently exploring the different options available to us, for example our recent securitisation; Polaris 2019-1 was structured using Sonia in preparation for the end of Libor-based transactions.”
Edwin Schooling Latter, the FCA’s director of markets and wholesale policy, said: “The key to this is that the end of Libor should not result in mortgage customers being transferred to other reference rates that are expected to be less favourable to the customer than Libor would have been.”
Latter suggested mortgage prisoners are unlikely to suffer detriment from the changeover because Sonia may offer less volatility in the medium to-longer term because it does not reflect the lenders’ costs of unsecured borrowing in wholesale markets, unlike Libor.
However, he added: “Some mortgage lenders may prefer to reference the Bank Base Rate directly rather than Sonia because it is well understood by consumers, and already used in some floating rate mortgages.”
UK Finance director of mortgages Jackie Bennett said the key consideration for firms is acting in their customers’ best interests and ensuring that any changes made are fair to customers.
Bennett added: “In the UK, coordination of the process is being led by the Bank of England’s working group on sterling risk-free reference rates. The working group is reporting good early progress in derivatives market adoption of Sonia as a replacement for Libor and is looking to promote similar progress with respect to other product types.
She added the mortgage lender trade body is working closely with members to understand any communication challenges they face: “We will continue to monitor messages from the regulators and developments in adoption of Sonia across other market users.”
One of the challenges for the industry is that closed book lenders which often sit in an unregulated space outside of FCA supervision, and so outside of working group efforts, may not be as supported as other mortgage lenders.
But the immediate mortgage market-related focus is on the small to medium enterprise and retail space driven by trade bodies and the regulator.
The Bank of England (BoE) through its steering group, Dear CEO work, publication of best practices, speeches and industry outreach continues to encourage consultation, debate and offer the industry support as a priority for Q4 and into 2020.
Commentators suggest the BoE is working with trade bodies to get mortgage lenders to move in a ‘peleton’ formation given the benefits of agreement and is encouraging all lenders to be involved in the UK industry group consultations. However, lenders will be left to make their own decisions with regulators loath to stray into anti-competitive waters.
And time is ticking down.
Eight in 10 landlords set to expand property portfolio
The report entitled ‘The Mortgage Lender: Buy to let: The Landlord Experience’, was conducted by OnePoll and addressed a panel of 100 landlords, revealing that half of all landlords agree that swathing tax changes have reduced the number of private landlords.
However, only one per cent said they think that has led to an increase in quality of rental property.
It also highlighted that only one in eight landlords had arranged specialist tax advice to help them manage their portfolios while only four in 10 used a specialist buy-to-let mortgage broker when arranging borrowing.
This is despite 45 per cent stating that they already owned between two and four properties.
Peter Beaumont, deputy chief executive of The Mortgage Lender, (pictured) said: “Our special report provides an in-depth guide to the buy-to-let market, including landlord obligations and yields around the country.
“Our panel of landlords have shared their worries and opinions and we’ve included landlord case studies to demonstrate the depth of borrower circumstances we are dealing with on a regular basis.”
Doug Hall, director at mortgage provider 3mc, added: “[The report] provides a snapshot of how landlords feel about the market, their tenants and the impact the myriad of changes has had on their portfolio intentions.”
According to the report, property maintenance, care of property and tenant behaviour were the top three concerns for landlords.
The Mortgage Lender signs second residential funding line with TwentyFour
The facility is expected to lead to a further public securitisation, likely to be the second Barley Hill transaction. The first Barley Hill transaction securitised a pool of £238.5m UK residential mortgages originated by The Mortgage Lender since it began lending in late 2016. The oversubscribed deal included £202.2m of notes (equivalent to 87 per cent of the pool) rated Aaa/AAA by Moody’s and DBRS.
The Mortgage Lender deputy chief executive, Peter Beaumont (pictured), said: “Our second warehousing facility underlines our success and commitment to the residential lending market. It follows our best month ever for applications and completions in July and our first oversubscribed securitisation earlier this year.
“Through listening to our broker partners, expanding the sales and underwriting teams and putting more resource into product development we are maturing into a lender that is known for its desire to do things differently and one that has a pragmatic approach to borrower circumstances in a changing world.”
TML goes whole of market with 2.83 per cent BTL deal
It has also abolished the application fee for multiple applications and reduced the completion fee by 0.25 per cent for cases submitted at the same time from introducer partners 3mc, TFC Homeloans and Dynamo – packager route only.
The changes mean all of its introducer partners can access its range with rates that start at 2.83 per cent for a two-year fix at 70 per cent loan to value with a £150 application fee and two per cent completion fee for individual and limited company applicants and 2.5 per cent for houses in multiple occupation (HMO) and multi-unit blocks (MUB) applicants.
The semi-exclusive change will mean brokers can submit multiple cases with no application fee and the completion fee will be reduced to 1.25 per cent for individual and limited company applicants and 1.75 per cent for HMO and MUB applicants.
The Mortgage Lender deputy chief executive Peter Beaumont said: “The changes we’ve made to our buy-to-let products are in direct response to what the market is telling us it wants. We’re listening to our broker partners and making the changes we need to help brokers help their customers and put The Mortgage Lender front of mind.”
This year, TML launched Help to Buy residential mortgages and its first Buy to Let remortgage product. It also completed its first UK mortgage-backed securitisation of residential assets for £238.5m.
The Mortgage Lender enters expat BTL market – exclusive
The products are available to expats with a minimum £40k employed – £60k self-employed – equivalent income and on a capital and interest, part and part or interest-only basis.
Rates start at 3.95% for a two-year fixed product at 70% loan to value (LTV) and 4.35% for a five-year fixed at 70 per cent LTV.
They are available for both purchase and remortgage applications.
To qualify, applicants must be able to pay the mortgage from a UK bank account and have an agent or family in the UK who can oversee the property.
The expat BTL products are available to the whole of the market, have a £150 application fee, a two per cent completion fee and a maximum loan of £750,000.
The Mortgage Lender deputy chief executive Peter Beaumont (pictured) said: “There has been a 30 per cent rise in the demand for expat BTL mortgages year-on-year and our new range, which is available up to 75 per cent loan to value, meets the increase in demand from expat landlords and gives BTL brokers more choice for their customers.”
In April, TML launched a BTL product range with free standard legal fees and no application, valuation or transfer fees.
There are 141 fixed BTL options on the market from 20 lenders.