Vida launches BTL deal with flexible exit charge
The buy-to-let deal offers landlords the option to fix their mortgage for five years, but leave penalty-free after three years.
The Vida Flex product is available up to 75 per cent loan to value (LTV) and rates start from 3.84 per cent.
Vida returned to the market in mid-August with deals available up to 85 per cent loan to value. It was forced to stop lending in March when the country went into lockdown and the capital markets temporarily pulled up the shutters.
Vida completed a £350m securitisation in July allowing it to relaunch its range.
Louisa Sedgwick (pictured), managing director mortgages at Vida, said: “We feel overwhelmed with the incredible response from advisers that we’ve had since our return to lending.
“Vida’s new plans are all about being the lender for Britain’s underserved borrowers and helping more people find a safe place to call home.
“The positive impact we can have on so many lives continues to spur our ambitions at Vida, and we look forward to working in partnership with advisers to build a new proposition that can really support borrowers in today’s mortgage market.”
Vida Homeloans relaunches with mortgages up to 85 per cent LTV
Vida was forced to halt lending in March when the coronavirus lockdown was introduced and capital markets closed-up, but after completing a £350m securitisation in July it has been able to relaunch.
Mortgage Solutions understands Vida will be expanding its proposition in the next few weeks as it rolls out to the market again.
As part of its return the lender has introduced specific criteria to tackle the new economic environment, including payment holidays, furlough and bounce back loans.
Where payment holidays are concerned, for residential and buy-to-let, applicants must have finished the payment holiday for secured and unsecured loans, with evidence of at least one payment made on their most recent mortgage or bank statement.
Residential applications from currently furloughed borrowers will be accepted provided they are returning to work within the four weeks following the application date.
However an offer will not be issued until they have returned to work and non-guaranteed income will not be included.
For borrowers who have already returned from furlough, an employer form is required along with further evidence.
Self-employed borrowers will be considered, although additional documentation and information will be required, and those utilising the government’s Self-Employment Income Support Scheme (SEISS) must be back to full-time work.
For landlord borrowers who have been furloughed, in all cases Vida will require the latest month’s bank statement, showing sufficient funds to cover three months’ payments or regular rental income from the portfolio.
First-time landlords and top-slicing are not permitted where the applicant is currently or was previously furloughed.
The same requirements and restrictions also apply to self-employed applicants.
Bounce back loans and Coronavirus business interruption loans cannot be used as part of the applicant’s income or to fund any part of the deposit.
Vida will not accept applications where these types of loans are secured against the security address. It will also require information related to the loan, for example the loan amount, the monthly payment and reason for the loan.
Regular non-guaranteed income is not acceptable for top-slicing or first-time buyer’s buy-to-let affordability assessment.
Limited company lending is open to special purpose vehicles, but not trading limited companies.
The highly active market driven by the stamp duty cut combined with social distancing restrictions for employees has meant many lenders have been hit by challenges maintaining services levels and have limited supply.
Louisa Sedgwick, managing director mortgages at Vida, told Mortgage Solutions that she was aware of the situation the lender was relaunching into.
“We will of course be monitoring applications daily. Because we don’t have a pipeline of applications yet, we can actively manage the volumes,” she said.
Sedgwick continued: “Our intention at Vida has always been to get back to lending. We want to support Britain’s underserved borrowers and we plan to return with a renewed ambition to change mortgages for good.
“As we prepare to return to the mortgage market, we’ve made our standard mortgage range of products up to 85 per cent LTV available to intermediaries through sourcing systems.
“We will be testing everything over the next week to make sure we can deliver the best possible service to our intermediary partners.
“However, we’re at the very start of a new journey for Vida and we have some exciting announcements in the pipeline as we invest in our proposition to innovate for intermediaries and our customers.
“We’ll have more to announce on these plans very soon,” she added.
BDMs starting to visit broker offices – Brightstar
Brightstar is also contacting its key lender partners to let them know the distributor will be accepting visits from lenders now it has put procedures and facilities in place.
Speaking on the Brightstar Vlog, Bluestone Mortgages managing director Steve Seal agreed there would be a change in the way lenders worked which could be a challenge for field-based BDMs to adapt to.
“We are seeing some appetite from intermediaries for BDMs to start knocking on their doors again,” Seal said.
“I think we’re a long way off from finding ourselves in the situation where we have BDMs out in their cars all day doing five or so appointments and knocking on brokers’ doors.
“But where certain key firms have established Covid secure environments where they can go in and be safe and continue to maintain that relationship, then we have started to see that and have facilitated that already.
“In a relatively small number but I’m sure that will grow over the coming months,” he added.
Very strict rules
Brightstar CEO Rob Jupp (pictured) who was hosting the Vlog noted that the firm was taking steps of its own to start bringing lenders back in to visit.
“I will be writing out to all our key partners with a scheme of work we put together in the last month,” Jupp said.
“People at Brightstar and Sirius have put together a really good document, track and trace app and full scheme of work for lenders’ key account people to come back into our businesses within very strict rules.
“It may be for some people, it may not be for others, but certainly where that key partnership has been really important and we want to make sure that those that want to come can do so – as much for the benefit of mental health as to get back into doing the job well.”
Discussing plans for potentially returning staff to offices, Seal noted that while Bluestones offices were open having had significant mediation work completed, he had told his teams they were free to work from home until the end of the year.
“We’ve gone out and researched with colleagues… and largely people want a balance between home and office working in the long term,” he said.
Seal added that productivity had increased with people working from home.
“We found during this period where we’re doing record volumes, I would argue we have seen increased level of productivity from people working from home where they don’t necessarily have distractions from working in an office environment.
“The challenge is preventing that level of isolation that might occur and keeping people feeling embedded in the business – but we’re very comfortable with the working from home principle,” he added.
Vida Homeloans managing director of mortgages Louisa Sedgwick and Pepper Money sales director Paul Adams were also taking part in the call.
They had both conducted research around their firms about when people should start returning to offices and how that should take place.
Sedgwick explained that Vida was in the process of whether to bring people back into offices for next three or four months or to keep them working from home if it works for them.
Its survey of staff had found around 90 per cent were very comfortable working from home but the remainder were potentially hampered by their individual situations.
The lender already had underwriters working from home but Sedgwick noted there could be compliance issues which needed to be taken care of.
Pepper’s Adams noted that with three sites it was likely to be a very complex scenario for the lender and many decisions may be taken on a team or individual basis.
“We’re engaging with a third party to help on a consultancy basis,” he said.
“It’s not going to be one size fits all.”
“One of the things that causes anxiety is uncertainty. We’re not going to suddenly say ‘everyone back’.”
And Adams emphasised that interaction with broker firms will look different because of changes in the way people work which can make them more productive.
Watch the rest of the Brightstar Vlog by following this link.
Vida returning to lending ‘imminently’
The lender said that completing its £350m securitisation last month had enabled it to begin plans for re-entering the market ‘imminently’.
Pepper Money has also revealed it is in the process of conducting a securitisation which should help it increase liquidity and lending volumes later in the year.
Weeks rather than months
Speaking on the Brightstar Vlog, Vida Homeloans managing director of mortgages Louisa Sedgwick said: “We’re getting ready to come back into the market imminently, so you will see something over the next few weeks.
“We’ve been working on products, pricing and proposition, making sure it’s ready to come back with something that might be pretty sexy when we do come back.
“And also working on a new sales team structure to compliment not just the new virtual trading world but also compliment what we want to do as a business going forward.”
Sedgwick noted that the team would be coming back from furlough over next couple of weeks and the lender was finalising and defining what it wanted to do on return.
“So it is just a case of watch this space, we haven’t formed a view on the date but we are weeks, rather than months away – so I’m really excited,” she added.
Capital markets open
Discussing the state of the securitisation market and its importance to the specialist lending market, Sedgwick was generally positive and credited Kensington Mortgages with being the first lender to get it going.
“I think the capital markets are definitely open, they are very keen to do trades which has been seen in the last few weeks,” she continued.
“Securitisation markets re-opening and relieving some of the liquidity issues is going to drive some great opportunities in the specialist market.
“The credit risk piece hasn’t yet played out, but capital constraints have and I think you’ll start to see some really good competitive products out there, which will enable some of the specialist customers to come back into the market,” she added.
Pepper Money sales director Paul Adams joined Bluestone Mortgages managing director Steve Seal alongside Sedgwick on the session hosted by Brightstar CEO Rob Jupp.
Adams noted that Pepper had started the year “like a train” and was well on track to reach lending targets, however he agreed that liquidity had been one issue slowing the market and the lender was in the process of releasing more funding as it targeted a big push towards the end of the year.
“We’re working on a second securitisation now which will help building our appetite and volumes towards the end of the year,” he said.
Seal added that since Bluestone returned its full product suite to market in June the lender had seen very high demand and was posting record months.
“Since then we’ve seen great appetite, we’re doing record volumes which is brilliant – and we’ve had great support from the broker community,” he said.
Watch the rest of the Brightstar Vlog by following this link.
Belmont Green’s £350m securitisation opens door for Vida’s return
The transaction should hasten Vida Homeloans return to the market after it was forced to stop lending during the coronavirus crisis.
The new deal, led by Barclays, JP Morgan, NatWest Markets and Santander, is the fifth residential mortgage backed securitisation (RMBS) transaction for Belmont Green.
The specialist lender said the transaction, Tower Bridge Funding 2020-1, saw significant appetite from investors.
The trade included a number of structural features, designed to mitigate any investor concerns over the impact of the pandemic.
AAA notes sold at 137 basis points over SONIA (Sterling Overnight Index Average), comparing favourably to Belmont Green’s Tower Bridge Funding No.4 securitisation in June 2019, which was priced only 10 basis points lower that the latest deal, the lender said.
Anth Mooney (pictured), chief executive, Belmont Green, said: “Covid-19 has had an unprecedented impact on the UK mortgage market. The virus and the subsequent lockdown effectively closed the securitisation markets, so our deal can be seen as an important staging post in the recovery of market confidence.
“Our responsibility as a specialist lender at this time is to help people with what are real life circumstances. Vida Homeloans can now look forward and refocus on the vital role it plays in supporting Britain’s many underserved borrowers, from key workers to single parents to the self-employed.”
Lack of funding support
In June, Kensington Mortgages completed a securitisation deal which the lender said would allow it to expand its product range and reduce some of the pricing on its deals.
Vida Homeloans temporarily stopped taking in any new mortgage business on 25 March, having pulled some of its products from sale a week earlier.
Vida cited a lack of access to liquidity facilities offered by the Treasury and the Bank of England to help lenders support borrowers who are financially affected by the pandemic.
Specialist non-bank lenders have been particularly hard hit since the coronavirus crisis began with several stopping lending as capital markets closed down and government and regulators enforced mortgage payment holidays for borrowers.
HM Treasury and the Bank of England have been in discussions with trade bodies about designing a scheme for non-bank lenders to support their funding models.
Giving evidence to the Treasury Select Committee of MPs in April, UK Finance CEO Stephen Jones explained that non-bank lenders financed through bank lines and then into securitisation structures were suffering.
He said: “Those funding structures are not working at the moment because the underlying markets are not working.
“And we are in very detailed discussions with Treasury and the Bank of England to try and design a scheme that will enable those incredibly important credit transmission mechanisms, often to underserved segments of the consumer and SME markets, to be able to be continue to operate.”
However, nothing has been published yet.
Alternative funding would let specialist lenders resume lending – Belmont Green
Details of schemes put forward by trade bodies to HM Treasury and the Bank of England were revealed today for the first time.
They include a possible Forbearance Liquidity Funding Scheme where the government would provide eligible lenders with cash to fund loans on which forbearance, such as mortgage payment holidays, has been provided that would currently fall outside of existing funding lines.
Specialist non-bank lenders have been particularly hard hit since the coronavirus crisis began with several, including Vida, stopping all lending as capital markets closed down and government and regulators enforced mortgage payment holidays for borrowers.
However, Belmont Green chief executive officer Anth Mooney told Specialist Lending Solutions that if the schemes are put into place it could signal a fresh start for the sector.
“A scheme which provided specialist lenders like Vida with access to an alternative source of liquidity would allow the sector to resume lending activities and support important customer groups like the self-employed, whose options would otherwise be limited,” he said.
Mooney emphasised that the specialist lending market had a wide customer base including the self-employed, single parents, NHS and other key workers, along with customers who’ve missed one or two payments because of an unforeseen change in their circumstances.
“Beyond the Covid-19 crisis, these customer groups will need our help more than ever, which is why specialist non-bank mortgage lenders must be offered the same liquidity support already made available to the high street banks by government – either directly under a specific scheme, or by forcing the banks themselves to take responsibility and channel government liquidity support out to the specialist mortgage sector,” he said.
“If that does not happen, these customers will be excluded from the market, unable to buy a family home or move their existing loan for a better deal.
“This is a very real risk, which ultimately will push many customers into paying far more to borrow money than they need to. These are always the customer groups who suffer first in a credit squeeze which doesn’t seem logical or ethical.”
Vida and Together pull entire mortgage ranges
The moves come as lenders are continuing to adjust to the ongoing turmoil created by the coronavirus pandemic.
In a statement issued to the London Stock Exchange, Together confirmed that it would temporarily stop accepting new loan applications on all its first and second charge mortgage products, only focusing on business already in its pipeline.
Together said: “At this time, given the general uncertainty, it is difficult to provide any degree of clarity on the potential implications to Together arising from Covid 19 or the government’s and/or regulator’s current or future responses to tackling the situation.
“We continue to manage the company on a prudent basis and to monitor the situation carefully. We will provide further updates as and when appropriate.”
Vida Homeloans has also made the decision to retract its mortgage range just a week after it pulled some of its residential and buy to let products.
At the time, the Vida warned that other non-bank lenders could follow suit due to a lack of access to liquidity facilities offered by the Treasury and the Bank of England to help lenders support borrowers who are financially affected by the pandemic.
The lender said it was told by its valuers that they would be unable to conduct physical valuations meaning any due to be carried out on an ongoing application will not take place until further notice.
A spokesperson from Vida said: “This also means that we are unable to accept any new mortgage applications for the time being. Any pre-valuation cases will now be withdrawn.
“We apologise for any inconvenience this may cause but hope that our intermediaries and their clients understand the issues which we are currently facing in light of unprecedented events and we will keep them updated as the situation changes.”
Vida pulls some products and warns other non-banks may follow
It noted non-bank lenders were not protected by liquidity facilities provided by the Bank of England and HM Treasury, adding that the move was to protect the future of its business.
When the Bank of England cut interest rates to 0.25 per cent, it announced that the counter-cyclical capital buffer for banks would be lowered from one per cent to zero to allow lenders to hold less money in reserve and therefore boost lending.
Anth Mooney, CEO of Belmont Green Finance, which owns Vida, said: “As we are treated differently from the high street banks, we have taken swift and decisive action to protect our business.
“All other non-bank lenders are facing into similarly difficult choices right now, as they weigh the tough challenge of maintaining customer access against the imperative of securing a sustainable future for their people and business.
“This is an industry wide challenge, not one that we face alone.”
Mooney insisted the lender’s trading in 2020 so far was strong but said it acted early to “conserve liquidity”.
As of close of business on Thursday 19 March, Vida Homeloans has withdrawn the one, two and three tiers within its buy-to-let and residential ranges.
It will continue to offer products on its buy-to-let four, residential four and five and residential Help to Buy four and five ranges.
Vida will continue to review its proposition and plans to re-open its full range for new customers when market conditions allow.
Louisa Sedgwick (pictured), managing director mortgages of Vida Homeloans, added: “Vida is a prudent and responsible lender and we remain proactive and fully engaged in serving our customers and intermediary partners.
“We are working closely with the intermediary community, industry bodies like IMLA and UK Finance as well as with our close competitors, to ensure that as an industry we come together to do the very best we can to help customers at this difficult time.”
Vida staff to work from home in response to the coronavirus
The specialist lender has run tests of the technology in the last few days and said it was confident of its ability to make this “swift change” to its business model.
It installed a new ‘8×8’ telephony system this week, which allows its telephone business development managers to function as normal in a ‘virtual call centre’. The system has been set up for telephone mortgage lending administrators too, so they will continue to be able to support enquiries on new and existing cases.
Vida asked its staff to work from home for two days; the first day to test the general network connectivity and resilience and the other to test the functionality of the ‘virtual call centre’.
Its technology platform and telephony system is expected to allow its telephone business development managers, field-based key account managers, underwriters and support staff to continue to support intermediaries through the application process while working from home.
Vida’s employees will be working remotely from 16 March to minimise the risk of catching and transmitting COVID-19.
Intermediaries can still submit cases as normal. Vida said the only noticeable difference would be that its key account managers will no longer hold face-to-face meetings, instead working exclusively by telephone and email until further notice.
They will also not attend roadshows, conferences or other industry events until Vida feels it is responsible for them to do so.
Louisa Sedgwick (pictured), managing director mortgages of Vida Homeloans, said: “Vida is well versed in helping customers in challenging circumstances and is able to react quickly to the situation the mortgage industry now faces.
“Since our technology and telephony systems enable our staff to work remotely in this seamless manner, it makes sense for us to do so immediately, until further notice. We thank our partners for their understanding and we wish the whole industry well for the next few weeks as it faces the challenge of the coronavirus.”
Karen Rodrigues quits Vida Homeloans
Rodrigues (pictured) will take up the role of director of sales at ULS in April.
Louisa Sedgwick, managing director of mortgages at Vida said: “Karen has been with us since the launch of the business in 2016 and has been a great team member, working with key partners including networks and clubs. I want to wish Karen the very best for her future career as she moves to a different role in the mortgage industry.”
Her move follows the departure of Guy Batchelor, managing director of Vida, who was replaced by Sedgwick and David Tweedy, chief executive of Belmont Green of which Vida Homeloans is part of.
Tweedy was replaced by Anth Mooney, former director of financial services at Virgin Money and ex-Northern Rock director.