The importance of competition
Jeff Knight (pictured) is director of marketing at Foundation Home Loans
The Liverpool-Manchester City rivalry for the Premiership title was passionate, breath-taking and unforgettable.
Both continued to win games in a relentless manner, showing few chinks in their armour. The rivalry was so intense that if one side dropped points, then there was every chance that the other would too. It was all about competition.
Competition between the two clubs drove each team to raise their games and produce better, more consistent performances. Sadly, Manchester City didn’t falter but competition is good for the game, and the same applies to the buy-to-let market.
We recently saw The Mortgage Lender enter the buy-to-let remortgage sector with a whole of market product range. Fleet Mortgages have also returned to the buy-to-let arena after a three-month hiatus on the back of securing a long-term funding deal, backing which should be seen as a positive for the whole sector.
Alongside a raft of product launches and criteria enhancements, we are seeing a regular source of activity from a range of lenders, meaning this is a sector which is far from a two-horse race for any title. Factors which are great news for the intermediary community and their clients.
However, there is only so much business (or if we are still talking footballing parlance – points) lenders can pick up throughout a season. Recent data from UK Finance showed that buy-to-let mortgages were on the decline as only 4,800 buy-to-let mortgages completed in February 2019 — 7.7% fewer than in the same month in 2018.
On a brighter note, more people opted to remortgage in this sector, as 14,400 remortgages, 2.1% more than the same period last year, were reported to have completed over the course of the month.
UK Finance suggested the buy-to-let house purchase market continued to contract due to tax and regulatory changes, while buy-to-let remortgaging increased as borrowers moved from fixed rate mortgages and locked into attractive new rates.
It’s difficult to argue with these sentiments, and this also further highlights the importance of competition within this sector and how individual lenders need to constantly manage their offerings, integrate new tactics and hit the back of the net with innovative new offerings – in a responsible regulatory manner of course.
The competition for new business is also resulting in more lenders looking to extend their offerings into new areas towards the more specialist end of the buy-to-let sector. Areas such as short-term lets, HMO’s and limited company lending for example.
As I’ve spoken about before – but make no apologies for repeating – many professional landlords are currently looking to restructure their portfolios through the exploration of more tax efficient methods and focusing their attention on limited company buy-to-let offerings. A sizeable shift which has certainly not gone unnoticed amongst specialist lenders.
Advisers and distributors are also having to change the way they do business in the modern mortgage market, especially when it comes to embracing technology. The Buy to Let Business/Buy to Let Club has just rebranded as Dynamo in a bid to reflect its evolution as a fintech business. This is certainly a company who is embracing the digital revolution.
In August last year we partnered with the firm to offer its advisers use of our new application programming interface (API) in a bid to reduce time and streamline the application process. And we hope to build further on this established tech relationship.
The future is all about utilising technology to streamline procedures – with lenders, distributors and advisers working closer than ever to benefit the end client.
And there are now greater levels of competition from tech firms offering cost-effective systems and solutions which can help make businesses, large and small, run more efficiently when correctly integrated.
Innovation has also become more prevalent in other areas of the buy-to-let sector. A wider age range of clients are now being accommodated. For example, a range of providers are lending up to a maximum age of 85 and with no age restrictions for those firms borrowing with a limited company structure. Then we have the relatively new term ‘slashies’ which is simply a term for someone with more than one job or career.
With a recent study by the Association of Independent Professionals and the Self-Employed (IPSE) suggesting that more than 320,500 self-employed people in Britain are working two or more jobs, this is an area in which a greater number of lenders are catering for – including Foundation Home Loans.
The market is changing, there are ever-changing shifts in needs and attitudes, and strong levels of competition across products, criteria, technology and service standards will help ensure that the buy-to-let sector maintains a healthy equilibrium.