Second-charge mortgage lenders have been battling it out with their product offerings in recent months but are they hitting the spot when it comes to what brokers need and are seeing demand for?
An increase in competition over the past few years and a new regulator have both resulted in a shift in lenders' product offerings and attitudes. The onset of the Financial Conduct Authority's regulation has meant that lenders are becoming more focused on what products best suit customers' needs. New lenders and more funding have also meant lenders have become more competitive with their pricing and fees over the last twelve months.
As well as having access to products with lower fixed fees, I, would like to see lenders looking at cap and collar type products.
We know there will be interest rate rises at some point and I think cap and collar loans would play well to the intermediary market to limit client exposure to an upward shift in rates and protect the client's ability to pay.
For us, one of the main changes has been the demand for larger loans. We have seen average loan sizes up from £28,000 to £52,000 In the past six months. The other major change is the increase in capital raising for buy-to-let investment purposes.
With a new regulator In town, brokers and lenders will be under Increasing pressure to show that the products they are recommending to clients are the most suitable ones.
This In some ways will mean that those lenders who are offering the most competitive rates will dominate the market. For those that are unable to match other lenders in terms of rates they may need to think outside of the box and focus on some of the areas where brokers feel there is demand, such as for older clients or In the buy-to-let space, meaning the next 12 months should result In some Interesting innovations from lenders.
Tony Salentino, director at Complete FS