Alan Cleary - Group Managing Director
According to the latest figures from the Association of Short Term Lenders, bridging loan applications in the third quarter of 2019 grew by nearly 17% on the same period in 2018, reaching £6.1bn.
The trade association’s figures also suggest that at the end of the third quarter, bridging loan books totalled £4.3bn, a reduction of 6% compared with Q2, but an increase of more than 5% on the same period in 2018.
The figures, while unofficial, show how strong growth in this sector has been at a time when transaction activity in the mainstream residential and buy-to-let sectors has been put under pressure from the ongoing political uncertainty.
They come as separate figures from Link Group suggest that P2P lending has also seen strong growth this year. According to Link, marketplace lending — which includes crowdfunded and P2P loans — hit a record £3bn in the first half of 2019, rising by more than £500m, an increase of 21.6%.
According to Link’s analysis, the sector’s performance was powered by an exceptional period of growth for property lenders — they accounted for three fifths of the additional lending in the first half, some £848m – a significant uplift of 54.5%.
We’ve also experienced a very strong year for bridging. Much of the turnover has been driven by landlords reengineering buy-to-let portfolios, adding value through refurbishment or conversion to HMOs.
This uptick has been good for those in the short-term sector; clearly there is significant value created in this market that feeds through into the mainstream markets. But we should also be mindful of the fact that strong growth and larger loan books bring greater responsibility for those loans and borrowers.
As a bank, we take this responsibility very seriously, including where we operate in unregulated markets, such as unregulated bridging. But because this market is currently partly unregulated, there are still lenders that appear less inclined to do the appropriate level of due diligence and which lend on deals that others would rightly decline.
It’s not always in the interests of the borrower to approve a loan application where the numbers look too tight.
As an industry, we’ve come a long way in cleaning up shoddy practices, such as charging interest before it is due and adding exit and extension fees onto deals. Unfortunately, these things do still go on in the darker reaches of the market. Currently, bridging lenders have the opportunity to self-regulate, but it’s possible that the senior managers regime will give the regulator more power to intervene in unregulated markets.
There are plenty of lenders, such as ourselves, who see this as a good thing. We already conduct all of our business to the standards expected of us in regulated markets. But it may pose headaches for some lenders not used to operating this way, something brokers are likely to start considering more seriously.
So, while 2019 has been a year of superb growth for short-term lenders, we expect 2020 to be characterised by some consolidation and a shake-out of any lenders that continue to cut corners. For borrowers, that will mean better protection. For brokers, it will mean working with responsible, stable lenders that are in this market to stay. And for the lenders that remain, it will mean a bridging book that is both resilient and profitable.
Alan Cleary, Group Managing Director
If we want to save money on our car insurance, energy bills or credit cards most of us wouldn’t think twice about switching suppliers.
So why are there still so many people not doing the same thing when it comes to their mortgage?
Earlier in the year, the Financial Conduct Authority’s Mortgage Market Study found that around 800,000 homeowners were spending more on their mortgage than necessary. The FCA reckoned that switching could result in an average annual saving of £1,000.
Research from MoneySuperMarket found that nearly half of people view remortgaging negatively, with around one in five saying they were embarrassed to admit having remortgaged. Of those surveyed, 23% of people assume they only needed to remortgage to borrow money, 13% believe they can only remortgage if their current deal is coming to an end and 11% think there is a limit to how many times they can remortgage.
However, what really stands out from the research is the fact that the majority of customers aren’t remortgaging because they simply don’t understand or aren’t aware that refinancing their existing mortgage could save them hundreds, if not thousands, of pounds.
Ironically, the research comes during a period when a low base rate and fierce competition between lenders means there’s probably never been a better time for borrowers to remortgage. Consumers looking to remortgage now have a huge amount of choice when it comes to deciding which product to go for, and they could also benefit from some of the lowest rates in recent times.
What the FCA and MoneySuperMarket’s findings highlight is the importance of advice and education in the remortgage process and the vital role brokers have in helping customers to refinance their properties.
It means there’s a huge opportunity for brokers to reacquaint themselves with previous customers who are approaching the end of their term or who have already lapsed onto their existing lender’s reversion rate. Lenders also have a crucial role to play by making sure they’re designing attractive products to meet demand.
At Precise Mortgages, we offer customers a range of remortgage options on both our core buy to let and residential mortgages. We’re also one of the first specialist lenders to offer Help to Buy remortgages with our deals including zero product fees, refund of valuation and cashback to help customers make the transition from first-time buyers to established homeowners.
So whether your customer wants to remortgage to move to a cheaper product or escape their existing lender’s reversion rate, are nearing the end of their current product term or want to unlock equity in their property, it’s up to all of us to ensure they’re aware of the options open to them and know where to go to access them.
Some 62 per cent of landlords who are planning to remortgage over the next year plan to do so through a broker or intermediary, data from Precise Mortgages shows.
The Q3 2019 Landlords Panel research conducted by BDRC on behalf of the specialist lender surveyed 888 landlords and found that 31 per cent had intentions to remortgage next year due to increased competition and product innovation.
Of those planning to remortgage, 63 per cent are doing so to avoid being moved on to standard variable rates. However, 22 per cent said they were doing so to get a better rate, while 24 per cent cited releasing equity as a motive.
The study found landlords with more than four properties were the most likely to change mortgage deals over the next year – with 35 per cent preparing to remortgage compared with 19 per cent of those with one to three properties.
Alan Cleary, Group Managing Director of Precise Mortgages, said: “With buy to let rates being reduced it makes sense for professional landlords to optimise their investments by remortgaging but clearly landlords need specialist support from brokers as the study demonstrates.”
Monday 16th December 2019 – Open as usual
Tuesday 17th December 2019 – Open as usual
Wednesday 18th December 2019 – Open as usual
Thursday 19th December 2019 – Open as usual
Friday 20th December 2019 – Open as usual
Saturday 21st December 2019 – Closed
Monday 23rd December 2019 – Open as usual
Tuesday 24th December 2019 – Business will close at 1pm
Wednesday 25th December 2019 – Closed
Thursday 26th December 2019 – Closed
Friday 27th December 2019 – Open as usual
Saturday 28th December 2019 – Open as usual
Monday 30th December 2019 – Open as usual
Tuesday 31st December 2019 – Business will close at 5pm
Wednesday 1st January 2020 – Closed
Thursday 2nd January 2020 – Open as usual
A record year for new homes constructed in England is driving increased interest in new build mortgages as the year-end approaches and developers look to meet sales targets, according to Precise Mortgages, the UK’s leading specialist lender*.
New government figures show 241,130 homes were built in England in 2018/19 – the highest number for 30 years. The Home Builders Federation reported an additional 380,000 new homes were due to be built and the major political parties are committed to supporting further expansion in housebuilding**.
Precise Mortgages is highlighting the need for an efficient and flexible approach from lenders in the run-up to builders’ year-end. Its extensive product offering is backed up by a New Build Priority Processing Team which is dedicated to assessing cases within 48 hours and making an offer within 21 days, as well as providing support and regular progress updates.
The lender is committed to helping customers with complex borrowing needs, such as self-employed customers with one year’s figures and those with less than perfect credit histories, including CCJs, defaults, DMPs and secured/unsecured loan arrears.
Group Managing Director Alan Cleary said: “December can be a good time for customers to negotiate the best price on a property as many developers are looking to meet key targets ahead of the end of the year.
“We’ve just recorded our most successful year for new build in terms of applications and completions. I believe this is down to a number of factors, including our intimate understanding of the market, getting to really know our intermediary partners and developers, our range of products and a commitment to delivering a service which delivers exactly what customers need.”
The lender has also extended its Help to Buy offering to Scotland in recent months, as well as launching a range of Help to Buy remortgages, including an option which allows customers to remortgage and capital raise to repay part of their original equity loan, to help early adopters of the scheme make the transition to becoming established homeowners.
* Source: BVA BDRC Project Mercury Report Q3 2019
** Source: https://www.theguardian.com/society/2019/nov/14/house-building-in-england-at-30-year-high-government-data-show