Top left to bottom right: Andy Young, chief executive officer at The Business Mortgage Company; Andrew Montlake, director at Coreco; Nigel Stockton, financial services director at Country- wide; Mark Long, research director at BDRC Continental; Ian Carswell, regional sales manager for North of England at BM Solutions; Lea Karasavvas, director at Prolific Mortgage Finance; Ian Potter, operations manager at the Association of Residential Lettings Agents; Michael Clarke, PR manager for Paragon Group; Greg Went, product manager for The Mortgage Works; Alex Hammond, communications manager at Kensington; Robert Sinclair, director at the Association of Mortgage Intermediaries
that the normal mortgage lender will get involved. You’ll then have a split in the market where BM Solutions and TMW will take 90% split of the market at two, three properties and under. You’ll then have the big brokers doing 20 and above through commercial and then there’ll be a free for all in the middle. I agree with Paragon that you won’t get back to £44bn through standard mortgage lending and that’s where the market’s going. Of course there’ll be new entrants in the market. If lenders can make double the money and the risk is the same which is the case in buy-to-let, then you’d be mad not to go into buy-to-let. AY: Which is what we’ve seen this year with a plethora of building societies entering the market this year. NS: Criteria will have to change. You’ll always go with BM Solutions or TMW if you’ve got three or less and you’ve got a bog standard 75% loan to value, 125% pay rate. Where everyone else has to play is on points on lending because the capital is key for them, so you can do 79% LTV and you’ll have to play around with the
110% to 125% pay rate depending on your risk appetite. Otherwise you’ll have nine people playing at 75% LTV, 125% pay rate and you’ll go to the big boys every time. GW: But that’s how we’ve seen some lenders come in over the past 12 months. They’ve been targeting other avenues of business. NS: Their funding is not going to work if they’re price led because BM and TMW will just happily compete on price. So you can’t compete on pricing on buy-to-let, so it’s going to have to be criteria.
What’s being done to overcome the barriers to groWth? Ian Potter: One of the predicaments we haven’t spoken about is the supply of property and there are lots of landlords looking to buy and expand their portfolio from two to three properties and they can’t get the right property. It’s just not available in the market and we’ll always generally have a housing shortage. NS: We’ve got four to five tenants for
every property to be let and rents keep going up and up so I agree, there are just not enough units available out there. AH: Competition from new lenders is helping and with the demand from certain areas, criteria and LTVs will creep up. We were at 85% LTV and the opportunity wasn’t there for all due to rental income but there was opportunity for some landlords. Over time as the funding situation eases and people become more confident investing in residential property, there’ll be an ability to ease that criteria. It won’t happen overnight but from a lenders’ point of view, it is going to start creeping that way. IP: When buy-to-let first began we had 75% LTV and I think that’s a prudent level of commitment on both sides. There’re still lots of people who have been putting their money into property and keeping their LTV down. NS: I haven’t seen any evidence on that. You might well be right. I know that if an investor can borrow against 75% then they will. I don’t see any evidence of an investor going in at 60%.
mortgage introducer OCTOBER 2011 39
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