Specialist lender's director of sales considers the mood of the market
This article has been supplied by Foundation Home Loans
Confidence can be a brittle thing or a formidable force, and this can sometimes change at the drop of a hat due to a variety of influencing factors. Some of this may be within in our control and others may be way beyond it.
Harking back to confidence levels across the market as they currently stand, and also staying with landlords for now, it was great to see the latest Q3 2023 BVA BDRC Landlord Panel research find that landlord confidence across a number of different metrics has improved over the course of the last quarter. The research outlined that encouraging numbers of landlords are anticipating continued increases in rental yield, a stronger performance from their own letting businesses, capital gains across the portfolio, and a better private rental sector (PRS) as a whole.
In other news, IMLA’S latest Intermediary Mortgage Market Tracker for Q3 2023 indicated the decline in confidence through 2023 may be recovering: intermediary confidence levels continue to decline and are now close to the same levels as Q4 2022. However, there were signs of recovery over the quarter with July being the lowest confidence point and September being the highest.
In another area of the Tracker, the average number of mortgage cases placed by intermediaries on an annual basis remained broadly stable at 92 per year, compared to 93 in Q2. This resilience should help generate some additional confidence throughout the wider intermediary marketplace, especially as this came within a challenging seasonal period where the number of mainstream residential housing transactions was particularly languid.
The data also went on to add that, despite this lull, residential lending accounted for roughly two-thirds of intermediaries’ business, buy-to-let around a quarter and specialist about one in 12 cases. Within the residential arena, there was a slight increase in the proportion of product transfers and a small fall in first-time buyers due to higher interest rates and the cost of living squeeze. Despite some largely negative headlines, the proportion of buy-to-let cases placed remained broadly consistent with Q2 2023 figures to offer more encouraging news.
The proportion of BTL and specialist business being written by intermediaries is an interesting one. From our lending perspective, there appears to be some well-placed optimism amongst portfolio landlords who are starting to really flex their muscles in terms of taking advantage of a range of opportunities across many different property types in a housing market which is favouring those cash rich buyers, those looking to divest or those in a position to access wider finance options.
In terms of ‘specialist’ business volumes, half of the recorded share of business handled sat under the adverse banner. It’s impossible to know the exact level of adverse involved in these cases but this represents a significant proportion and is certainly something to closely monitor going forward.
From the ongoing conversations we’re having with our intermediary partners, we know that a growing number are dealing with clients who may have some historic or more recent credit issues and are having to work even more closely with specialist lenders operating in this space who have the solutions in place to meet their borrowing requirements. We are also seeing an increasing number of enquires from borrowers with complex incomes or multiple sources of income and from key workers who are struggling from a high-street affordability perspective.
All of which suggests that the specialist lending marketplace will play an increasingly prominent role within a variety of client conversations over the closing weeks of 2023 and into 2024.
Grant Hendry is director of sales at Foundation Home Loans
Sources:
http://www.imla.org.uk/resources/publications/imla-mortgage-market-tracker-q3-2023.pdf
