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Mortgage memo – current bridging, BTL and lending trends revealed

Private Finance, an independent whole of market mortgage adviser, has released its latest mortgage memo for February.

We outline its key findings below.

Bridging: huge growth predicted as the market opens up


There is an increasing number of lenders, including MT Finance and Glenhawk, entering the regulated market and the market is opening up to an increasing number of borrowers or loan to values.

Private Finance predicts we will see an increasing number of bridging loans in the coming weeks. With the end of the stamp duty holiday and the potential for increased chain breaks, it is likely many will consider this type of finance (although the savings may not justify the fees).

It says regulated lenders are able to lend to residential borrowers, whereas unregulated lenders are purely for investment property. With the increased potential for chain breaks, we may see an increasing number of borrowers turn to regulated bridging lenders in the coming weeks.

The changing buy-to-let market

Interlinked with the above, Private Finance also expects the unregulated bridging market to grow as many landlords and those looking to invest in property look outside of straightforward buy-to-lets (BTLs).

Unregulated bridging covers things like refurbishments, auction finance, uninhabitable properties or simply just investment and this links to a recent trend with portfolio landlords moving towards other projects in the search for profits as they feel the full impacts of uncertainty, and the accompanying issues such as rental voids, of the BTL properties they hold.

The firm has witnessed a large increase in the number of clients and new enquiries seeking development, refurbishment and self-build mortgages, highlighting a shift away from straightforward BTL purchase financing.

There have also been more traditional landlords looking into opportunities for houses in multiple occupation (HMOs), multi-unit freehold blocks (MUFBs) as well as commercial and semi-commercial properties in the seek for higher returns as tax changes have significantly impacted their profits.

The return of 95% lending?

According to Private Finance, while lenders have the approval and ability to offer 95% mortgages, they may be inundated with enquiries.

This marks a ‘paradigm shift’ from 2020 where lenders were moving out of the 90% loan-to-value (LTV) and even the 85% LTV space.

The return to 95% LTV lending would see a huge increase in applicants as buyers who were previously excluded for lack of deposit will be able to get on the property ladder again.

The adviser predicts the return at this LTV will be akin to a levee breaking as when one lender moves all will follow. However, it could still be a while before this happens.

It could well also just be limited to the highest of high-quality cases, low-income multiples, specific property types – similar to 90% mortgages.


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