At last! The Council of Mortgage Lenders has started to report buy to let lending figures on a monthly basis instead of quarterly. This means that we can more accurately see how the sector is performing compared with overall mortgage lending, something that many of us have wanted it to do for years.
The figures revealed that buy-to-let lending to the end of July totalled £11.3bn which means that the sector is still on track to reach my predicted figure of £20bn in 2013. Once again, I’ll add in the caveat that the actual figure could be higher if the more complex transactions are included – my guess is that some of these may be counted as commercial and not buy-to-let mortgages.
It was interesting to see that the highest monthly lending figure so far this year – £2bn – occurred in July which is traditionally a time when we expect lending to dip as everyone starts to slope off on summer holidays. And if the whole buy-to-let sector was a busy as we were in August, I anticipate that the lending figure will be just as strong.
And now that the autumn is here, we have reached what is traditionally our industry’s busiest period. I don’t just foresee trouble ahead, I think it has already arrived. I’m concerned the entire industry is not sufficiently geared up to cope with the volume. We’ve already started to see application turnaround times lengthen. There seem to be hold-ups all the way along the line.
Can the situation be rectified? Possibly, if we pull our fingers out and do whatever it takes to get the job done. If that means putting in the hours and improving the systems so be it.
Like most other lenders, our own brand Keystone is not where we’d like it to be. So we’ve started to break down and analyse the process from start to finish in order to identify the problems and make amends. And as for coping with volume, well, I take my hat off to our case managers who have been working tirelessly in recent weeks, even coming in for 10 hours on a Saturday in an effort to clear the backlog.
Our aim is simple. By the end of the year we plan to have the time it takes from decision in principle to offer down to 22 days. When you think about what’s involved, particularly on more complex transactions – that’s a realistic figure.
But we won’t get there alone. It will take the cooperation and effort of valuers, underwriters and solicitors amongst others to get where we want to be.
As if meeting demand wasn’t enough, lenders also have to meet their end of year targets. In the past this has often led to raft of product re-pricing in October and November, so it remains to be seen whether this will happen again.
Perhaps disappointingly, there has been little in the way of innovation recently. It could be that lenders are just too busy. But innovation is needed. And there is an enormous opportunity awaiting lenders who rise to the challenge.
We have, of course, seen an increasing number of bridge to let products on the market and I would hope to see more of these offered in the coming months. But it’s not enough; investors are constantly asking for more products to suit their property development needs. I would hope we will see more development finance and heavy refurbishment products.
Investors have also been asking us for longer term fixed rate buy-to-let products of 10+ years and even lifetime fixes. These may not sound very exciting but getting diversity into the buy-to-let mix would be welcome.
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