Summer is normally pretty quiet for the mortgage market.
The school holidays prompt parents to take the kids away for some much-needed time off. Parliament and the press enter silly season, worrying more about who’s been voted off Love Island than what to do with taxes. Most people who might think about moving later in the year are too busy enjoying the sunshine and barbecues in their own back gardens to indulge in speculative house hunting.
There are parts of the market that are suffering as a result. Property transactions are down across the board. The latest HMRC stats show residential transactions fell 9.6% between May and June, representing a 16.5% drop compared with June last year. Non-residential transactions also fell by 7.2% month-on-month and 12.4% year-on-year.
And yet, there’s always a flipside to every story, and lower transactions in the residential market doesn’t preclude the fact that a lot of families need to move home — the need to scale up because of growing families or to move to take up a new job remains. It’s perhaps not a surprise then that demand for rented accommodation remains resilient, especially given its flexibility in a time of uncertainty. We’ve noticed strength in the London market, particularly since the available stock to rent there has fallen over the past few years following widespread portfolio rebalancing in the wake of tax and regulatory changes for landlords.
The introduction of top slicing to our portfolio affordability assessment model for landlords remortgaging buy-to-lets or expanding their portfolios has proven popular, especially in the capital and its surrounding commuter areas.
The knock-on effect of the jams in the residential market doesn’t stop with buy-to-let. Those operating in the short-term market have been aware for some time that landlords who know what they’re doing longer term have been looking to add value to properties upfront, often using bridging to finance refurbishments before refinancing to a term buy-to-let.
We’re seeing a lot of this type of business, where in the past traditional regulated bridging loans made up a larger part of our day-to-day.
This is telling in itself: we see our role as a specialist lender as one of spotting underserved niches in the mortgage market — across residential, buy-to-let and bridging — and designing funding solutions that meet borrowers’ needs.
That we’ve seen such strong demand for short-term finance to pre-fund buy-to-let purchases reveals there is persistent demand for finance from landlords, despite the increasing tax burden they’re bearing.
It also confirms that life goes on in spite of political uncertainty at home and abroad.