Santander’s confirmation that it is to enter the BTL market is good news for brokers and also for short term lenders like ourselves. Next year I believe we will see a number of lenders opt to go into the BTL market for two reasons, firstly the market for low LTV super prime customers is being dominated by a handful of lenders which is resulting in margin compression. Secondly, the Private Rental Sector is set to grow again next year so there is likely to be more demand than supply.
My guess is that we will see building societies become increasingly attracted because it is difficult for them to compete for prime business as the competition for retail deposits is no doubt pushing up their cost of funds. Brokers will no doubt be the favoured channel of distribution as BTL has never been sold in branch networks in great volumes so in order to get traction new entrants will opt for brokers.
For short term lenders there will be more options available for borrowers to exit the bridge to a long term lender so this is likely to make bridging lenders more confident and should open up additional funding, certainly this is the case from Precise Mortgages’ point of view. So whilst the overall mortgage market might not be that exciting in 2012 certain segments of the market look like they are set for growth.