The start of a new decade
15 Jan 2020
A new decade has been ushered in and it’s impossible not to look ahead to the next 10 years with a far greater degree of optimism than many mortgage market stakeholders would have felt when Big Ben chimed to start 2010 all that time ago.
Users of social media will have seen a raft of people posting comparative pictures of themselves from back in 2010 and now.
If we were to have one of the mortgage market back then, I suspect it would have looked incredibly pale, somewhat withdrawn with a growing number of worry lines etched across its face, such was the impact of the Credit Crunch and the recession we were all about to go through.
A decade on, there’s no doubting that we’re much more flush of cheek as a mortgage industry; indeed, while there have certainly been challenges over the past few years, the intermediary community and market has appeared to grow stronger and stronger, with much to be positive about and a number of opportunities in specific product sectors that are undoubtedly there for the taking.
Take the buy-to-let market for instance.
10 years’ ago there were many market commentators who were all but convinced the sector was dead; that lending levels would flatline with only small numbers of existing borrowers being able to secure repeat finance, and new landlords simply unable to enter the sector.
Buy-to-let, we were told, was over as a sector, was over as an investment, and was certainly over in terms of advice and lending.
How wrong those commentators have proven to be.
In December Paradigm provided an online hints and tips advent calendar to our member firms which outlined a number of criteria accepted by all types of lenders.
It’s still there now and it’s incredibly informative to look at the type of property/borrower/tenant/LTV, etc., accepted by a highly competitive range of buy-to-let-lenders.
Here’s just a few examples of criteria that lenders will accept in the buy-to-let space that would have seemed completely inaccessible 10 years ago.
Lenders will lend to landlords who wish to let to asylum seekers; they’ll lend up to 85% LTV; they’ll lend on properties with a floorspace of less than 30 square metres; they’ll lend on regulated buy-to-let; they’ll lend to trading companies that are not SPVs but are active in another business area; they’ll lend to first-time buyers including those who are buying HMOs as a first investment and they’ll lend to landlords who will let properties out on Airbnb.
And that’s barely scratching the surface of what lenders will do in this space, because what has happened is that we’ve seen landlords pushing into different areas, or wanting to lend to certain types of tenants, and as a result of that demand we’ve seen lenders move their propositions to be able to accommodate such requests.
The buy-to-let/private rental sector is not a homogenised sector and therefore the product ranges and criteria on offer from lenders is not either.
This is not a sector surviving on the largesse of just two mainstream operators; if anything, it has grown and developed in ways we might never have thought possible 10 years ago.
For borrowers there is a level of complexity in today’s buy-to-let market that plays fully into the hands of advisers, especially those who can either get to grips with the products/criteria on offer, or use mortgage desk services like our own, in order to access the information and place their cases accordingly.
And those changes and the expansion in buy-to-let is mirrored in other mortgage sectors, perhaps most notably later life lending, but also complex residential and high net worth and mortgages for the self-employed/contractors/freelancers, not forgetting first-time buyers and the myriad schemes and products available to those with access to the Bank of Mum & Dad, and those without.
In other words, we have come a long way in just 10 short years, and we’ve not even touched on the technological changes or the increase in product transfer activity or the rise of robo advice or customer retention platforms, the list goes on.
2020 therefore begins with a wealth of opportunity for advisory firms to tuck into.
There are challenges but these tend to be competitive ones rather than those based purely on the quest for survival as they were back in 2010.
That being the case, let’s embrace what our market has to offer and ensure we are front and centre in the shop window to capitalise on all the needs of our clients.
They are many and varied and, for the most part, they can be satisfied by you without them having to go elsewhere.
Let’s not miss that opportunity, now or in the future.
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