Leader: Battle of the proc fees?


At the start of the year experts predicted a bumper year for the buy-to-let sector post-MMR as a result of the stricter rules brought in to govern residential lending.

However, two months after the new rules came into effect, anecdotal evidence from brokers suggested that pick-up had not quite come to fruition.

But moves from two medium-sized building societies this week could be a sign that lenders’ appetite for this type of business is increasing as they seek to hit their year-end lending targets.

In the residential space the tool of choice to attract new business seems to be rate cuts but it seems in the buy-to-let sector, lenders are opting for another method: increasing procuration fees.

Both Skipton and Leeds building societies have increased their proc fees for buy-to-let cases to 0.5 per cent from 0.35 per cent and 0.37 per cent respectively.

Moreover, Leeds made a point of stating it had funding available to grow its buy-to-let book, clearly showing its appetite for this type of lending.

And with plenty of other lenders out there paying less than 0.5 per cent for buy-to-let cases, it is not outrageous to imagine procuration fees could be the next battleground as lenders look to grab business before the end of the year.

Another sector set to boom, according to commentators, is the remortgage sector, which has suffered in the low interest rate environment.

But brokers are confident of a remortgage boom over the coming year, with brokerage Mortgage Advice Bureau predicting remortgage loans to jump from £55bn in 2013 to £80bn in 2016.

With an imminent increase in base rate on the cards, that scenario becomes very plausable indeed.