Competition is alive and kicking in B2L

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JOHN HERON, MANAGING DIRECTOR, PARAGON MORTGAGES

For the first time since September 2009 the number of products in the buy-to-let market is approaching the 500 barrier.

It’s still a long way from the sector’s peak, but marks another milestone on the road to recovery, particularly as product numbers are almost double those of last year.

The sector has benefited from the return of established lenders such as Paragon and new entrants, with the ultimate beneficiaries being landlords and tenants.
Whether this message is getting through to the broker market has yet to be seen.

When Paragon asked intermediaries whether they had seen an improvement in buy-to-let mortgage finance during the first quarter of 2011, nearly half said improvement was marginal.

But there was a 30% increase between the mid-way points of Q1 2011 and the final quarter of 2010, which is better than marginal.

A number of the new players are smaller building societies that perhaps haven’t got the marketing budget to make a really big splash, but they are having a go and are among a number of lenders making a concerted effort to compete with the two largest lenders in the sector.

These lenders dominated the field for three years in the wake of the financial crisis and naturally they are the first point of call for intermediaries.

The challenge facing lenders is to make intermediaries aware of alternatives and that competition is alive and kicking in the buy-to-let market.