B2L withdrawal will not affect sector

Another week, another lender changes its product range. Last week it was Abbey, and the changes we have made are likely to generate more hyperbolic headlines than any others since the mortgage market started to feel the effects of the credit crunch.

Last week we temporarily withdrew all the buy-to-let products available through our broker channel.

This may not be popular with some brokers but it is only a temporary measure to ensure we maintain high service levels on our core residential lending.

In my last column I mentioned that we are seeing high demand for mortgages, primarily because we are among the few lenders still lending. I warned that as a result our service levels were faltering and said we were looking at ways to cut the time we take to process applications.

This range withdrawal is one of the plans we have implemented to address the issue. The decision was taken on the basis that buy-to-let is not the biggest part of our business and the mortgages take a considerable amount of time to process.

As one of the few sectors we cover that still require paper-based applications, buy-to-let is time-consuming to process and in this time of high demand, we felt this could affect the processing of our residential mortgage range. A concern for many in the industry is that our move represents a nail in the coffin of the buy-to-let market, reflecting the demand we ex-pect to see from a contracting buy-to-let sector. After all, buy-to-let has been booming for some time and many investors have never experienced a lull in the market before.

But the truth is that temporarily removing ourselves from buy-to-let will have little effect as we have always been a comparatively minor player in the sector.

In fact, there’s a good chance that for those investors who have healthy buy-to-let portfolios and are prepared to regard their property holdings as long-term investments, the current state of the market represents an important business opportunity.

This is because the shortage of high LTV mortgages combined with rising house prices is driving huge numbers of potential first-time buyers out of the market and into rented accommodation.

So concerns about the wider implications of our move are unfounded. It should not be seen as our interpretation of market prospects but rather a desire to maintain service levels and processing efficiency.

Expect to see us relaunch into the broker buy-to-let market with a competitive product range when market conditions allow.