Despite the general air of unease, lenders’ balance sheets remain robust and for most it is business as usual
In my previous offering for this column I said if the UK voted to leave the EU I would expect buy-to-let lending to go into a period of freefall as the Bank rate rose, house prices dropped and jobs disappeared.
Fortunately, despite political and economic uncertainty, things are not as bad as that yet. But I am conscious of unease out there following the Brexit vote.
At Mortgages for Business, a handful of customers have put purchases on hold while they wait for markets to settle. And business this quarter is slower than last.
As a country we are good at talking ourselves into a recession and, with uncertainty everywhere, inevitably we will see a short period where customers delay decisions.
Many clients will seek our opinions on rates and market activity. To help your conversations, remember two things.
First, do not talk down the market. Do not spook customers by saying: “Lenders are pulling products.” This creates more uncertainty. We will no doubt have a few product changes but not necessarily for the worse. At Mortgages For Business we will continue to promote the advantages of five-year fixed rates.
Second, stay positive and inform clients that it is business as usual. Now is the perfect time to contact clients and reassure them. In a quieter market we need to be proactive, speaking to our regular contacts and chasing old leads.
I have had calls from most of our key lenders to confirm that there are no immediate issues.
Balance sheets remain robust and for most of them it is indeed business as usual, although a number could do with upping their game to brokers (and landlords) now that we have entered a quieter period since the stamp duty changes.
I am disappointed to note that it is taking buy-to-let lenders longer to produce offers. Last year it took an average of 40 days to produce an offer (according to our management information) and this pattern continued into the first quarter of 2016, even when everyone was swamped with applications.
Unfortunately, Q2 was a different story: 45 days in April, 56 in May and 47 in June. Even July is running at a worrying 56 days again. Of course, some lenders are quicker and some applications more complex than others, but even simple applications are taking longer than they should.
Our serious investors are likely to be very active soon as they take advantage of some spooked vendors and I am positive that, with the right message to clients, we should be able to maintain new business levels – but only if lenders step up too.
David Whittaker is managing director of Mortgages for Business