Firms must display a ‘specialist underwriting approach’ for borrowers with more than four buy-to-lets from 30 September 2017, scrutinising the borrower’s full portfolio of properties and outstanding mortgages in addition to the standard assessment.
Buy-to-let lenders are expecting a remortgage boom from portfolio landlords before the Prudential Regulation Authority rules take effect later in the year.
Firms must display a ‘specialist underwriting approach’ for borrowers with four or more buy-to-lets from 30 September 2017, scrutinising the borrower’s full portfolio of properties and outstanding mortgages in addition to the standard assessment.
Bob Young, chief executive of Fleet Mortgages, Phil Rickards, head of BM Solutions and Paul Brett, managing director of intermediaries at Landbay, all predicted a rush to remortgage before this change because there are question marks over how lenders will cope with the transition.
Young said: “There will be a remortgage boom in September and in October we will see lenders exit the portfolio market.”
Rickards said: “Remortgage activity is already high and, as with any approaching deadline, a rush to beat it is entirely possible.”
And Brett said: “There very well could be a portfolio mortgage boom.”
He added: “We are already seeing an increase in portfolio customers; many landlords with portfolios keep up-to-date with the industry and are aware of the changes.
“Portfolio landlords are likely to have a broker they’ve used for a while so hopefully they will explain the situation.”
However it seems BM Solutions is doing its homework to ensure a smooth transition, as Rickards added: “Our immediate priority remains working through portfolio underwriting requirements ahead of September.”
Since it doesn’t take deposits Fleet Mortgages isn’t bound by PRA rules, while according to Brett Landbay is well placed to adapt compared to biggest lenders due to its focus on buy-to-let underwriting rather than residential.
Brett urged brokers to get clued up on the portfolio buy-to-let change, adding that this represents an opportunity to generate business by showing expertise.
He said: “If the broker is on the ball it’s a great opportunity for them as well as the client.
“If they understand the changes and how lenders interpret them, in their own ways, brokers will be able to develop a high level of expertise.
“Many more clients will need that level of guidance because so many will fall under the realms of this ‘specialist underwriting approach’.”
Landbay will publish materials to help intermediaries nearer the PRA deadline.
