Last week I was rather surprised by press reports that Nationwide and The Mortgages Works had made a U-turn in its buy to let lending criteria. I can’t see that any such event occurred.
It was reported first by Money Marketing and Mortgage Strategy on Wednesday 27 February that TMW had stopped new lending to landlords who have tenants receiving housing benefits, except in remortgage cases.
Which is interesting as what precisely does that mean? Either it will or it won’t.
Then just two days later this decision was allegedly reversed. Really?
From our perspective, up until Friday 1 March, TMW did not accept tenants in receipt of housing benefits in the vast majority of cases – just like many other mainstream buy-to-let lenders.
Like most other brokers who have a detailed knowledge of buy-to-let lending criteria, the fact that TMW did not state categorically that it did in its lending criteria, meant that it probably didn’t.
I suspect that TMW’s silence on this topic allowed it to be pragmatic about the issue.
OK, so if we really thought that we had a strong case in all other respects, we might argue the proposition with TMW but mostly we’d just place the deal with a lender that did accept housing benefit tenants.
So where and when exactly, did this supposed U-turn take place?
Our sources at TMW told us last Wednesday that this criterion was under review but that no decision had been made. Does that constitute a U-turn?
Then on Friday we did receive notification of TMW’s intention to change its buy-to-let lending criteria.
It said: “With effect from Friday 1 March, TMW will accept buy-to-let applications involving Local Authority tenants or those who are in receipt of housing benefit.
Our standard buy-to-let mortgage conditions will be amended to reflect this change and will be available from next week.”
So as far as I can see, no there was no U-turn.
TMW simply improved its criteria and that is to be applauded.
I’m guessing it took the decision for a number of reasons – policing the former condition would have been nigh-on impossible and in this day age, is a tenant in receipt of housing benefit really any less of a risk than one who isn’t?
So well done TMW and let’s hope more lenders follow suit.
And while I’m ranting, Santander pulled a fast one with us recently.
A customer rang us for a buy-to-let remortgage quote because his initial rate period was coming to an end and his lender, Santander, had offered him a rate of around 4 per cent.
Obviously he wanted to find out if it could be bettered. We were able to offer him a two year discounted rate of 3.49 per cent with Godiva which he accepted.
The application was progressing well until the solicitors asked Santander for the redemption statement, at which point Santander called the client and offered him a rate of 2.50 per cent.
The client was quite apologetic towards us but what could he do? It was a much better rate so he took it. Of course, we have remonstrated against this sort of behaviour. Only time will tell if it will happen again. It would be interesting to hear if any other brokers have experience anything similar.
Elsewhere things have been relatively quiet. There have been the usual new products and product withdrawals. Mostly these have centred around slight rate cuts which will please investors and movement on end dates.
We did get some criteria changes from Aldermore which is to be welcomed. It will now accept fully gifted deposits even from step-relatives. And it joins the likes of Skipton, Woolwich, Northern Rock and Keystone in allowing investors to let-to-buy. In the current climate I wouldn’t be surprised if more lenders follow suit in this regard in the coming months.