There is a growing need for BTL lenders to secure volume elsewhere, which will only improve brokers’ product range
It has been intriguing to see the recent announcements from a number of buy-to-let lenders planning to diversify into the residential space. There is no clearer clue as to how these players view the future of the buy-to-let market.
Certainly, suggestions that lending volume will drop in 2017 and 2018 appear to be confirmed by such moves, and there is obviously a growing need to secure volume elsewhere.
This does not necessarily mean the buy-to-let sector is a dead duck. Indeed, figures from the end of last year show a renewed interest and demand, particularly for remortgaging.
However, this activity was before the Prudential Regulation Authority’s underwriting changes and one wonders how much of it comprised savvy landlords getting in before the changes were implemented. The early months of this year will tell us much more about the health of the market.
It is interesting to see the sectors these lenders are moving into. Almost all are moving towards what we may call ‘complex prime’, focused on, for example, self-employed, freelance or contract workers, or lending to those in later life.
Increased competition is great; however, there will need to be some key differentiators compared to what exists in these already competitive spaces.
All of that said, if lenders can demonstrate some out-of-the-box thinking and a greater focus on personal underwriting and affordability, coupled with pricing for risk, advisers will have further product strings to add to their bows.
Paul Nye is director, business partnerships, at Stonebridge Group