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Secured Trust Bank have announced they are considering a halt to all new mortgage lending."This action is being taken in view of the current economic climate."
Who is next?
That is a rather selective quote, I prefer this one:“Market pressures show no sign of abating, with competition intensifying, as evidenced by increasing Loan to Value metrics and lower new lending margins."
As in they are pulling out of the market, as they can not beat the current entrants on price whilst maintaining a sustainable business.
_________________________________________________________________________The above post is not financial advice, its often me rambling - passing time on a coffee break.If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance._________________________________________________________________________
Selective quotes are rife in all worlds so one has to dig to find out why people say what they do
I of course am er 100% neutral in everything i say - not
A mortgage broker naturally has an agenda - albeit I agree a very valuable one for clients
So ....Are new entrants low margins sustainable or are they offering loss leader rates to gain new biz
Many LA`s come in at 5% to attract new biz while their next door neighbours offer 10%
Sustainable yes for a year but many bail out when they find 5% doesn't really pay for all the work do
Jonathan Clarke. http://www.buytoletmk.com
That is the one JC, it is a clever business that identifies that they are uncompetitive. Given the current market conditions and holds out to get back into it.
Typically as you would at this point when "lending margins" are low and As the article says they start loosening criteria so they say its "increase loan to value metrics". You would see more risky lending, adverse, lowering income multiples. As competition in the prime is too hot, lenders start looking less-prime to maintain business levels.
Given FCA oversight that is harder, so they all keep fighting for prime. Until going into loss leaders and some less well capitalised fall away, as this bank did.
Maybe you start getting free iPhones with every mortgage, if competition continues.
Hardly the start of Armageddon, especially as in comparatively recent times as that headline, we are also told that a new BTL lender has launched (Zephyr), another new bank has today received FCA authorisation to trade, a leading long established UK BTL lender is quietly offering forward funding facilities of £2m (with £5m tranches subsequently available - and we are currently arranging this for our Clients), and that 'high street' names including Virgin have just extended their criteria for portfolio landlords..... Shall I go on? I could. There's so much more good news still out there to tell you about.
In short, do not fear the ad hoc scaremongering headlines. Instead, stay informed by working with professional specialist Brokers such as PTFS.co.uk who can provide strategy, peace of mind and best value from the market.
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Did not your forward funding lender stop lending over night some years ago ie National Home Loans/Consumer Loans ?
From my not insignificant experience of lenders mortgage brokers are the last to know when things go wrong
Mortgage brokers are just fair weather friends as far as lenders are concerned
Lol . thanks for your not insignificant input. As a Broker with 26 years of daily grind under my belt, I would agree with you up to a point, however a professional Broker is the borrowers friend, we don't work for lenders we are instructed by the borrower. They sell their own product, we advise and select solutions from the wider market.
The forward funding facility is very much alive and kicking. You are thinking of another lender altogether.
I didn’t say your lender was not alive and kicking.I was just pointing out the same lender has in the past stopped lending.
Anyway any comment on FLEET morgages announcement today .Who is next I wonder?
In my view the Fleet move is significant, withdrawing products with immediate effect, including declining applications that have been agreed in principle would have been resisted by the sales and marketing departments. I would now expect a tightening of underwriting for those applications previously received and not offered yet.
If a lenders warehouse line is pulled there is no money to tighten the criteria on
I am referring to those applications that may have been received in say the last two weeks and have not been offered yet, there is no mention of these within the press release so may be within agreed funding.