Brokers predict criteria war as B2L volumes dip


Brokers are predicting a criteria war as Government intervention leads to reduced volumes in the buy-to-let sector.

Lenders have revised their buy-to-let offerings over the past week in an effort to drum up business.

Accord cut rates by up to 30bps and TSB by up to 35bps. TSB is also slashing residential rates by as much as 30bps.

Further, Barclays loosened its criteria to accept applications from joint borrowers and sole proprietors, while Kensington raised its maximum loan caps for buy-to-let and first-time buyers by £500,000.

Earlier today Santander announced it is cutting its buy-to-let rates by up to 30bps.

But brokers predict lenders will soon switch their attention to residential lending to compensate for lower buy-to-let volumes.

Chadney Bulgin mortgage partner Jonathan Clark says: “Mainstream buy-to-let lenders must be seeing a reduction in lending and are attempting to combat this by sharpening rates. Altering criteria is surely a better way of achieving this but they appear to have their hands tied with the more stringent regulation that is now filtering through.

“Those lenders with both residential and buy-to-let may try to make up a shortfall on buy-to-let by refocusing on residential, but can interest rates drop even further?”

Newcastle Intermediaries last week brought in a residential three-year fixed product at 1.99 per cent up to 80 per cent LTV.

London Money director Martin Stewart says the issue of criteria is becoming the main battleground, especially on buy-to-let, and lenders could turn more to residential.

He says: “Rates brought the business from 2013 but that’s kind of done now; it’s saturated.

“So I think it is all about criteria now, and who will lend the money.

“The BDMs coming in and telling us about their unique selling points are the ones picking up all our business at the moment.”

Stewart also says not all clients are fixated on the lowest rates and some may prefer to deal with lenders offering generous income multiples. He says: “There can be a huge differential between lenders and then price goes out the window.

“It’s irrelevant to the client whether they are paying 1.5 per cent or 1.75 per cent but, if a lender will give them £300,000 rather than £250,000, they’ll take the higher amount all day long and a higher rate as a result.”

Trinity Financial product and communication manager Aaron Strutt thinks lenders may struggle to cut buy-to-let and residential rates any further.

He says: “It’s difficult to see them coming down much more but we’ve been saying that for years and they’ve been coming down anyway.”

He adds: “Some of them have been easing their criteria to get applications through. We’ve even seen some of them being more lenient on clients who have had some mild form of adverse credit, where previously they would have been an automatic decline.

“Lenders can’t all offer the cheapest mortgage rates because there are so many of them, so they know they have to have reasonably priced rates and ease their criteria.”

However, Clarke says buy-to-let has seen no good examples of loosened criteria recently. He says: “There has been no real relaxation, although we are expecting more ‘mainstream’ buy-to-let providers to move into limited company buy-to-let lending, which should increase competition and drive down prices.”