As of late we have seen Secure Trust Mortgages and Magellan Home Loans leave the mortgages market. These lenders cite various reasons for their withdrawal from the market including; competition in the market place, reducing interest rates, competition for funding and an increasing credit risk.
Other changes have also been occurring, Fleet Mortgages are still in the market however at the time of writing they are not currently offering mortgage products, this is due to them using their previous tranche of funding more quickly than expected and not yet having secured another tranche.
These developments could be a concern as these three lenders mentioned above would generally be considered ‘niche’ lenders, meaning that they either look at applications from the credit impaired or have a particular nuance that makes them stand out from the mainstream lenders.
Also clients who wish to remortgage their property for debt consolidation up to 90% loan to value, the two lenders that would have previously come to mind would have been Natwest and Virgin Money. However Virgin Money no longer offer this, they have reduced their maximum borrowing for debt consolidation to 80% loan to value.
Combining these points noted above with changes in the mainstream market too are mortgages markets changing and becoming more restrictive than we have had in recent years?
I am not suggesting we are in line for a post 2008 slump where achieving a mortgage was extremely difficult but these potential restrictions could potentially hinder the ability to obtain a mortgage quite so easily.
Some may say that the uncertainty of Brexit looming is a potential cause for these restrictions and they could be right. I do not pretend to know the ins and outs of what goes on behind the scenes for mortgage lenders but it could be for a whole number of reasons.
However, the two that jump out at me are the increased competition in the market place and increasing credit risk as mentioned for the above lenders who have withdrawn from the market altogether. With mortgages these go hand in hand and as the age old saying goes with high risk comes high reward but at present, for some lenders in particular, the reward clearly doesn’t warrant the risk.
Daniel Brown BSc (Hons), Cert SMP
16th March 2018