Since the crunch we have seen first time buyers pretty much excluded from the market and house prices protected by Government, BoE and lender policy. The upshot of this is a very healthy buy to let and letting sectors, which are growing to fill the void created by the above.
In recent times there have been 2 stalwarts for Buy to let in The Mortgage Works and Birmingham Midshires and this week the sector which is approx. £12bn this year has been forecast to reach £20bn by 2015, but my question is who will do the uplift in lending?
If we look at the parent companies’ mainstream lending arms for TMW (Nationwide) & BMSols (Halifax/Lloyds) we see they are not lending as much as perhaps they might normally expected. With that in mind do you think the FSA will allow them to weight their books more heavily towards BtL, which is seen as higher risk lending? Me neither.
What about the other lenders in this market, well we have the existing ones who have stuck it out such as Coventry who do decent volume but don’t have capacity for stepping this on by the kind required to make this uplift happen even when added together.
There are others who cut right back or exited and now have restarted lending. Of these the big guns are Abbey & RBS. Abbey relaunched this week with a decent set of rates and we wait to see what appetite they have. In the case of RBS, their issues are well known and perhaps their BtL pockets are not so deep given other Government led lending commitments they have, although this week’s slight easing of interest cover criteria is a very small step in the right direction.
There can of course be uplift from other lenders entering the market, however even as the likes of Aldermore and Precise offer buy to let and are completing deals, this is very small beer in the overall market – the uplift doesn’t come from here.
So who then is going to lend this, well everyone will likely lift lending by some degree over the next 3 years, however it seems only Abbey have the ability to impact the market in a significant way and we don’t know they will want to and even if they did I am sure they won’t take that much market share so quickly….so it seems we are stuck for who is taking the lead……unless….
Unless it turns out that every broker’s favourite, HSBC fancies a larger piece of the buy to let mortgage pie – they have an appetite for lending, want high profile customers and must look at the margin available on buy to let and think that is attractive, couple this to a very low risk existing mortgage book – but surely that is too far?
In the end you can predict all the uplift you want but unless the overall economy improves then there is likely to be a lack of funds for this to happen and if the economy does improve, surely this will bring back the FTBs and that is where we started this.