Market Commentary with our Director of Mortgages
Richard Howes
2 December 2022What is causing concern is the BTL market which shows little sign of revival and is worryingly affecting both lenders, brokers and distributors in terms of opportunity and income. The purchase market in BTL has effectively ground to a halt as the combination of affordability and stress rates make it impossible to make cases fit at the levels required and to be expected given the criteria and credit modelling of Lenders. This is impacting both mainstream and capital market lenders, the latter significantly as they are finding it difficult to secure new levels of funding to take them into 2023 and either remain out of the market or with product suites that simply do not fit. What would be great to see in 2023 is some real imagination from lenders as to how they innovate in criteria and product to stimulate this market. Currently, dropping rates in BTL is a bit like putting petrol in a 3-wheel car, it still won’t go, we know the market is there, we just need some help from the lenders.
It is the time of the year for predictions on the size of the market in 2023, and Lenders have reported the purchase and residential area to be as low as £200bn next year up to £285bn (down for the anticipated size of 2022; £310bn). With the BTL market potentially at £10bn, down from £50bn this year.
However, opportunities abound in the PT market as referred to above and where brokers will have to play. Currently, most lenders write between 60% and 70% of this business themselves, as advisers have been distracted by new customers or because they maybe “cherry pick” those customers with larger advances to place? If the new business market slows, then advisers should be well positioned to take advantage and secure more of this area for the benefit of their business and their customers.
