"While pandemic related search numbers have fallen drastically in most areas, in the self-employed market lenders are still hesitant to completely remove restrictions."
With lockdown restrictions lifted, and the end of the stamp duty holiday at the end of June, brokers searching for pandemic related terms dropped dramatically in most sectors in July.
There is one area where the tracksuit bottoms are still on however, the self-employed sector is still under the cloud of covid, with lenders still restricting mortgages to those who have received government support during the pandemic. This said, in July there were some positive moves in the market that suggest sunnier skies are ahead.
Speaking of sunny skies, the environment was also on the agenda in July, with green mortgages the latest innovation from lenders. These new products offer perks for energy efficient properties, and are popping up at a rate of knots in the residential and buy-to-let markets.
At Knowledge Bank we were also innovating, and we launched an industry first ‘product transfer tracker’. The new tool will allow brokers to check the product transfer windows for every residential and buy-to-let lender which offers a rate switch. We understand how crucial it is for a broker to know when a lender will offer a fee-free transfer to another of its products and this new tool will make that easy to identify this window so you can contact clients at the right time.
Let’s dive in to the criteria changes.
WC 28th June
As we approached the stamp duty deadline, criteria continued to change at a rapid pace. Buckinghamshire Building Society revised its minimum income requirements on its buy-to-let range. On loans of 75% LTV or below, it will now accept a minimum income of £25,000 down from £35,000.
Chorley Building Society launched a new product at 95% LTV as part of the government’s ‘First Homes’ Scheme where key workers are given a discount on the purchase price of new homes.
In the buy-to-let market, both The Mortgage Works and Virgin Money increased their LTVs and launched green products. The Mortgage Works returned to 80% LTV for properties with an energy performance rating of C or above. Virgin Money increased LTV on new ‘business buy-to-lets’ to 65%, up from 60% and also launched two new shared ownership ’greener new build’ mortgages.
WC 5th July
The first full week of July began with a slew of changes. Barclays streamlined its application process, limiting the number of documents that a client needs to provide, and introduced automated verification of payslips to speed up the process.
Green mortgages continue to be popular, and the latest lender to offer them is the Bank of Ireland which launched a new range of green buy-to-let mortgages.
YBS Commercial Mortgages relaxed its criteria on commercial lending. Now, applicants with an understanding, but not experience, of managing commercial investments may be accepted.
Kensington made a positive change to its self-employed criteria to remove restrictions for freelancers who have used various government support options. It also removed the requirement for evidence of funds to support three-months’ mortgage payments for all customers, including the self-employed.
WC 12th July
In the third week of the month, at Knowledge Bank we launched our latest revolutionary enhancement with the addition of a product transfer feature.
Lenders will often waive the Early Repayment Charge (ERC) for borrowers remortgaging onto another of its own products. With the product transfer tracker, brokers can find the time-period at which lenders are willing to waive the ERC, which enables them to contact their clients ahead of this.
In criteria news, Hope Capital launched its LIONS Fast Track Bridge to provide brokers and borrowers with faster bridging loans. The offering provides borrowers with interest rates from 0.54% up to 65% loan to value, with a maximum loan of up to £500,000.
Landbay broadened its criteria to launch, for the first time, two buy-to-let mortgage products for first-time landlords who want to invest in houses in multiple occupation (HMO). The products are available for HMOs with up to six bedrooms, including new-build properties.
WC 19th July
The trend for rewarding homeowners with energy efficient properties continued, with Halifax Intermediaries launching a green mortgage. The new product comes with £250 cashback for those buying homes with an EPC or Predicted Energy Assessment (PEA) rating of A or B.
Halifax also increased its maximum loan size on all home mover and first-time buyer products at 85-95% loan to value. The new maximum loan size is now £570,000. This excludes new build and affordable housing products.
WC 26th July
In the last week of the month, Aldermore had more positive news for brokers with self-employed clients. The lender announced the re-introduction of one year’s self-employed trading for both residential and buy-to-let applications. Aldermore added that if the client has been unaffected by the pandemic and income is seen as sustainable, it can consider using the latest year’s figures for affordability.
While pandemic related search numbers have fallen drastically in most areas, in the self-employed market lenders are still hesitant to completely remove restrictions. This said, there certainly were steps in the right direction in July, with two lenders loosening criteria. The hope for brokers with self-employed clients is this will spark more lenders to follow suit in the next few months. Outside of the self-employed arena, criteria appear to be returning towards normal, and this can only be positive news for brokers.
