Residential, BTL and Commercial: The current state of play

  Residential news: High LTVs and self certification; both problems that have compounded repossessions in recent years, one outcome has seen the demise of the self-cert mortgage, and the news breaking currently is that the proportion of new lending done at an LTV of more than 90% accounted for just over 2% of new advances in Q2 2010, according to recent figures from the FSA.   The proportion of new lending that is at a high LTV had been on a downward trend since mid-2007, when it accounted for 14.8% of lending. Both of these are great moves forward, and although it appears like it is penalising customers, in real life it is assisting them when they didn't seem prepared to assist themselves.   BTL News: In the past, when discussing BTL mortgages, several high profile names would automatically spring to mind; names like Birmingham Midshires, C&G, Lloyds, Bank of Scotland, etc.   Any bright spark among you will realise that the few names I’ve mentioned are now in fact all rolled into one – under the guise of the Lloyds Banking Group –  and to that end they've released these revised guidelines:   Lloyds Banking Group is to no longer offering buy-to-let via brokers through its Cheltenham & Gloucester and Lloyds TSB Scotland brands. The move comes as part of a package of wider reforms to its buy-to-let offering. From next Friday, buy-to-let property portfolios will be limited to a maximum of three properties, or £2m worth of lending - whichever is exceeded first, across Lloyds group. In an email to brokers last week, Peter Curran, head of intermediary distribution at Lloyds group, said: “These changes mean we will continue to support the vast majority of landlords through our leading specialist buy-to-let brand, BM Solutions, helping to ensure that we are providing a competitive and appropriate proposition.”   Basically, the ever shrinking BTL offering is squeezed tighter and tighter, which is bad news but, conversely, means that more and more customers will have to approach brokers to source their funds.   Commercial advice: This week I got a new enquiry, referred to me by an IFA. The client is looking to purchase a new build property, comprising of a shop unit downstairs and two self contained flats upstairs. The customer has requested 70% LTV, which shouldn't be an obstacle, although it will stretch the clearing banks appetite. As I had one or two enquiries hanging around I decided, prior to putting a funding summary together, to chat with my contacts in the major high street banks.   To my dismay, the first three; Barclay's, Lloyds, and Nat West/RBS all replied with something along the lines of, “no thanks, we have totally switched off with investment properties, to concentrate on trading businesses”. Only Santander had an appetite, however, until the property has tenants in place, or at least tenants in waiting, then background income would have to be sufficient to service the loan – a similar story from Aldermore as well.   However, even if we could satisfy that, the stress testing that the lenders are hell bent on still causes a further obstacle to getting the LTV to 70%, so what was a short while back a simple case, is now extremely difficult to place with ease.   Let's hope the gloom around lending appetites lifts sooner rather than later.