19 November 2020

The issues facing first time buyers, homeowners and potential movers!

To say that the government is currently under a substantial amount of pressure is something of any understatement. Keeping political points of view or persuasion on the sidelines, the handling of the coronavirus pandemic and Brexit remain huge issues which are dominating time, resources and attention.

I fully appreciate the importance of tackling these concerns and the major toll they are having on the health – physically, mentally and financially – of the UK population. However, there are also a number of other areas which the government can ill-afford to ignore across the housing and mortgage market.

The problems facing mortgage prisoners are mounting and a recent report from the London School of Economics (LSE) has put the onus and ethical responsibility on the government to solve the mortgage prisoner crisis quickly and recommended a package of measures to do so.

Another situation which is cause for great concern revolves around cladding, and finding appropriate solutions for such deputes should also be high on the government’s agenda. Through no fault of their own, all too many people continue to find themselves in a position where it is neigh on impossible to sell certain property types or even remortgage them - which is an unacceptable outcome.

There are also question marks in the air around whether the government will extend the stamp duty deadline in light of some lending, survey and conveyancing backlogs which are having knock-on effects on a growing number on housing chains. A trend which will only intensify in the coming weeks.

These are just some of the issues facing first-time buyers, existing homeowners and potential homemovers. In the current economic climate, there are many extra layers of complexity for all those involved in the mortgage journey. And this really does outline the importance of impartial, independent financial advice when it comes to  overcoming a growing number of challenges and ensuring that people have access to the right kinds of financial options to match their current, and future requirements.

So, speak to a specialist, impartial, independent adviser about your property related needs in this increasingly uncertain marketplace.

22 October 2020

A number of factors are driving activity throughout the Buy to Let sector

It’s fair to say that the money pages often tend to focus on the negative parts of the Buy-to-Let (BTL) market rather than the positive ones. I’m sure you will continue to see headlines around landlords selling property, but what you are less likely to read about is the continued resilience being shown by lenders, landlords, developers and investors - both domestic and overseas.

A number of factors are driving activity throughout the BTL sector. The obvious one being that a growing number of landlords are taking advantage of the current climates to expand their portfolios and tap into some changing tenant demands and priorities – in relation to property type, flexible home working capacity, location and outside space.

Houses appear to be more in demand than flats and it’s widely suggested that a greater number of people are looking to rent for longer. The return of the student population has also played a key role in both increased activity and demand. There was no guarantee of this happening during the early summer months and this represents a significant proportion of the BTL market, especially for professional landlords. The more specialist areas such as holiday lets and ex-pat BTL are also seeing additional options emerge and there is also growing demand among first-time buyers looking to enter the BTL market.  

This was highlighted in recent data from Legal and General which showed that criteria search combinations for first-time buyers, first-time landlords and non-owner occupiers have seen an 18% increase since the beginning of September. The data also showed that ‘holiday lets’ was the second most searched term among mortgage advisers in September, moving from the top spot in August. International travel restrictions have fuelled an increase in demand for ‘staycations’, with many choosing to holiday in the UK rather than travelling abroad.

The importance of the private rented sector continues to rise as the housing supply gap widens, the amount of affordable housing being built lessens and demand for rental property will only grow. These factors are generating more opportunities for landlords and lending appetites are escalating to provide some highly competitive funding options.

So, if Buy-to-Let is something you are considering, speak to the professionals and especially a specialist in this area, in order to make the right impact..

17 September 2020

Demand across the rental market remains strong.

The purchase market is currently buzzing. In a throw-back to some of the heady days of old, we’re hearing stories of bidding wars and properties being snapped up before they even come onto the market. It’s clear that whilst the raising of the stamp duty threshold has certainly worked to accelerate activity across the housing market, changes in people’s working and financial circumstances are affecting their decision-making process. Meaning that the value attached to good, professional advice has never been higher.

Demand across the rental market also remains strong as many potential homebuyers from the pre-lockdown period are currently being forced into renting for longer due to lingering economic and workplace uncertainty. And some demands over the size, quality and location of these rental properties are also shifting.

Here at Impact Specialist Finance, we’re seeing a swell of activity within the buy-to-let (BTL) marketplace as a wide range of investors, developers and landlords are looking to take advantage of the stamp duty tax break. This was reflected in research from cherryplc.co.uk which outlined that more than half of brokers have seen an increase in buy-to-let purchase business in recent weeks. 57% of brokers said they had seen a rise in purchase business, compared to just under 12% who reported an increase in demand for capital raising on a remortgage.

In addition, more than 30% have seen an increase in individual purchases and nearly 27% have seen an increase in limited company purchases. There has also been an increase in the number of clients with more specialist BTL requirements, with nearly 8% of brokers seeing a rise in demand for houses of multiple occupancy (HMOs) and almost 4% seeing more enquiries for lending on both multi-unit blocks of flats and holiday lets. This uplift within the intermediary market is reflective of increased momentum across the board as the more professional end of the landlord spectrum are actively looking to add to their portfolios and acting swiftly on the opportunities that are currently presenting themselves.

Confidence around the BTL proposition is growing as more and more lenders are re-entering the market after a temporary break due to lockdown restrictions and competition is swiftly rising, especially amongst specialist lenders and with the option of 85% loan to value now being back on the table.

Many challenges remain but the importance attached to private rented sector is all too evident. And the sector - alongside a robust advice process – will continue to evolve to meet this growing demand, not to mention ever-changing landlord and tenant needs.

03 September 2020

Rates being pulled quickly, have your paperwork ready!

The current climates continue to affect the mortgage market in many ways.  We’ve seen lenders pull rates quickly, decreasing rates one day and increasing them the next.  We’ve seen some lenders remove the higher LTVs (Loan to values) 95%, some removing 90% and others removing 85%.  We have seen some lenders launch limited edition products and others have not re-entered the market at all!  All signs of the times and of the fast-moving pace of the money markets. 

The only certainty seems to be uncertainty and where lenders may have previously considered clients on furlough, or those who have taken bounce back loans within their businesses, this may have changed as lenders look to ensure clients can afford the mortgage for the next six months and onwards.  Some require a letter from the client to confirm this whereas others may require to view bank statements to prove they have the funding. 

Some lenders may have previously taken all of a client’s bonus or commission when working out affordability, but more recently have reduced this to 50% of received monies.  We’ve seen one lender limit the maximum term of the mortgage to 25 years for first time buyers and change their acceptance on where deposits come from, for example - gifted deposits.  

With changes happening quickly, it is vital you get all the documentation required to the lender as quickly as possible to secure your rate and that product availability.  Especially as some lenders are receiving pre-covid volumes of business, but only with 50-70% of normal staffing levels.  This means that some lenders can be weeks behind and if you only provide certain items, you may find that you go to the back of the queue when the outstanding items required are submitted, which extends the delays. 

Most lenders will no longer prioritise the valuation of the security property.  They will assess the whole mortgage application and confirm agreement to proceed before instructing the valuation.  Be aware of this as Estate Agents need the valuation instructed asap.  Depending on the lender you go with, this could take a few weeks.

Finally, expect this to continue for some time.  Not just because of the ongoing pandemic, but also with the stamp duty temporary changes taking effect, a lot of people are trying to move before the end of March deadline.  Good for the property market, but who knows what may happen with processing, criteria and resulting inevitable delays over the coming weeks and months.

06 August 2020

A good time for first time buyers?

Recent changes to the stamp duty threshold have attracted a growing number of enquiries from First Time Buyers (FTB) looking to take advantage of this short-term tax break in order to get their foot onto the property ladder.

This is a great time for FTBs to take the leap but as we continue to operate in a transitional lending marketplace, there are still many things to consider.

So, here are some tips for FTBs.

  • Let’s start with a simple piece of advice. If you are an FTB considering purchasing a new car and a new house – purchase the house first. Financial commitments such as car finance repayments can quickly limit affordability on FTB applications.
  • FTBs should also be aware that they need to declare ALL credit commitments. Income and credit-related scrutiny has, quite rightly, been ramped up from a lending perspective in recent times and clients must share all relevant financial commitments.
  • An area highlighted by one of our top advisers is that FTBs can often overlook student loans as being a credit commitment, as these are automatically deducted from pay packets. However, most lenders will include this in their affordability calculations.
  • It is often not necessary to instruct an independent surveyor for a Home Buyers Report and savings can be made by using the lender’s valuer to complete the report.  There are pros and cons to this, which any good adviser can walk you through.
  • When purchasing the biggest asset of your life, invest in the right professionals and undertake some due diligence. Online conveyancers can appear to be a good low-cost option but may not necessary be the best option as this is purely a process driven approach. As opposed to a solicitor which acts in your best interests and provides professional advice. 
  • An estate agent’s in-house broker can offer a simple solution to keep the mortgage and purchase with the same company. However, these are rarely independent “whole of market” brokers and tend to work from a restricted panels of lenders. This may limit your mortgage options and you may not get the best deal or most suitable mortgage.

This is a great time for FTBs in the right financial position to take the plunge but the importance of good, professional mortgage advice should not be underestimated in what remains a challenging time for many. If your interested in finding out more, why not speak to one of our advisers about how we can help you on this journey.

16 July 2020

Slightly more complicated for the self-employed to get a mortgage

There are many concerns in the current climates relating to job security and especially how lenders look at the self-employed following lockdown with regards to consistency of ongoing income and customer base.

The growth of self-employment, contracting and the gig economy has continued to challenge and change the make-up of the UK workforce over the past few years. Government statistics for 2019 saw the number of self-employed people rise to 4.93 million, some 125,000 more than a year earlier and this is a number which is only expected to grow.

As a specialist mortgage broker, we’re seeing a greater number of clients who are not only self-employed but who have a variety of income streams and different ways in which they generate their income. As the raising of the Stamp Duty threshold is set to encourage more first-time buyers into the housing market, and homemovers to take the next step up the property ladder, it’s vital that mortgage brokers are adept at meeting the ever-changing demands of such borrowers.

Moving forward, an even greater proportion of homebuyers will have a non-traditional income history and many differing forms of current income for lenders to contend with. Despite this sustained shift, it largely remains the case that those with a salaried or traditional source of income are far more likely to be eligible for mainstream mortgage deals than those with complex income scenarios. Having said that, there also remains a misconception that those missing out on the perceived favourable terms of high street lenders are unable to get a mortgage. Thankfully, there are a healthy number of lenders - some on the high street, many more not on the high street - who have competitive product ranges and flexible criteria in place which can service the needs of the self-employed workforce or those with multiple income streams. A large proportion of these products are available through specialist lenders and some can only be accessed via a mortgage broker.

It’s always been slightly more complicated for self-employed people to obtain a mortgage and – especially over the short-term - this may get even tougher when you consider additional Covid-19 complications. The rise of self-employment and the gig economy will undoubtedly continue. And with many underlying lending restrictions still in place, especially at higher loan-to-value levels, this really does magnify the importance of good, professional advice in helping self-employed clients and those with more complex incomes to achieve their homeownership goals. 

07 July 2020

Lenders attitudes to risk and operational capacity affect higher LTVs

Loan-to-value (LTV) has always played a huge role in the mortgage market, although borrowers can often be unaware of the activity swings going on behind the lending scenes and the reasons for these.

Getting back to basics for a moment, LTV is essentially the size of mortgage that a lender is prepared to offer borrowers in relation to the value of the property they are looking to purchase or remortgage. It is expressed as a percentage. For example, if a lender offers a mortgage deal which has a maximum 80% LTV, it means they will lend up to 80% of the property value. And the borrower will need a minimum 20% equity if they are remortgaging or a 20% deposit for a purchase.

The well-publicised reintroduction of physical valuations offered a huge lift to the mortgage market generally. This was swiftly followed by a flood of lenders welcoming new business. After a cautious initial approach, LTV levels initially crept up, but the question is – did some lenders open the higher LTV door a little too soon? Were they surprised by the amount of pent-up demand or were they not quite in the right position to make such moves from a logistical and operational sense?

Only individual lenders can answer this question, although many 90% and some 95% LTV products have been launched and pulled in quick fashion as lenders appear to be struggling to service the influx of enquiries. Or lenders are simply offering them for a limited time through limited distribution channels to help control the supply and demand element.

Highlighting products being pulled from the market is certainly no criticism of these lenders. If service levels can’t be maintained, then this is clearly a sensible move to make. Managing risk and operational capacity has always been a challenge for lenders, and this is proving increasingly difficult in the midst of some uncertain economic conditions. This is reflected in product numbers. Recent data from Moneyfacts revealed that the number of products at 90% loan to value has shrunk to less than a tenth of the figure available pre-lockdown. The data outlined that there were 779 residential deals for borrowers with a 10 per cent deposit in March before social distancing rules came into force, shutting down the market. However, at the end of June, there were said to be just 72 products on offer at 90 per cent LTV, a drop of 91 per cent.

The higher LTV lending battle will be an ongoing theme throughout the rest of 2020, and this will be dictated by a number of issues from an internal and external perspective. There’s no getting away from the fact that borrowers are crying out for higher LTVs. However, there remain question marks over house prices, unemployment figures, not to mention if and when a recession may hit – and how long this may last. From a lending perspective, issues remain over attitudes to risk, operational capacity and servicing the valuation backlog and pipeline cases.

We also have to consider how this period is affecting new and existing borrowers. At Impact Specialist Finance, we’re seeing greater numbers of clients coming through our doors with some form of adverse credit, and this number is only likely to grow. When it comes to servicing these needs, fewer options are currently available. Many specialist lenders are tightening criteria and it’s difficult to know if, and when, the near prime product market will experience any significant improvement. Especially in the midst of lingering uncertainty around exactly how payment holidays will affect credit assessments.

These trends will prove interesting stories to follow as lenders continue to get to grips with demand and how best to service ever-changing borrowing circumstances amidst a variety of Covid-19 and wider economic repercussions. What we do know is that mortgage advisers will prove invaluable in quickly determining whether a case is viable or not and advice has never been more vital than it is today.