Keystone’s forecast, based on official CML data, suggests the number of BTL mortgages in arrears will fall below 7,000 by the end of 2016.
Latest official estimates show 9,300 cases of buy-to-let mortgage arrears as of Q1, down from 10,300 the previous quarter and 11,300 in Q1 2015.
Keystone’s projections estimate that – as of Q2 2016 – 8,500 buy-to-let mortgages stand more than 3 months in arrears across the UK. This is expected to drop to 6,600 by Q4 2016. Managing director of Keystone Property Finance, David Whittaker, comments:
“The referendum result was unexpected, the precise impact is unknown, and it is still rather early to tell what will happen. But we have seen no let-up in demand for buy to let mortgages and we don’t expect to see any change in the downward trend in buy-to-let arrears as a result. Landlords are confident – and lenders have no reason to feel any differently.”
Keystone is continuing to write new business, despite some wider changes in the lending landscape post-referendum.
The firm has also confirmed that all three of its three funding lines are still open: Paratus AMC funds Keystone’s buy to let products; Together funds ranges aimed at residential and commercial landlords with some adverse credit; and Aldermore Bank funds Keystone’s Loyalty Range – a suite of buy to let mortgage rates exclusively available to Keystone customers who have other Keystone-Aldermore products.
David Whittaker continues:
“There are many landlords out there who still need finance, particularly professionals who are in the process of remortgaging to secure a solid five year fixed rate or selling their personally-owned portfolios to their limited companies. We have ensured Keystone has the funding lines in place to provide landlords with the solutions they need and in the four weeks since the vote we have forged ahead with our lending. We are increasing traction with brokers and investors. Optimism is the keyword here.”
Keystone has recently launched an online portal, KASS, which allows brokers to submit and track all Classic Range cases and earn an increased procuration fee of 0.6%.
In response to CP11/16, the PRA’s consultation paper which proposed stricter underwriting standards for buy to let, Keystone has introduced separate stress tests for individual and limited company borrowers applying for products in the Classic Range.
For individuals the new formula of 145% at pay rate or notional rate of 5.25%, whichever is higher, will be applied to term trackers and 3 year fixed rates. For borrowers choosing a 5 year fixed rate, the pay rate will be used.
Stress tests for limited companies are to remain at 125% of pay rate or notional rate of 5.25%, whichever is higher, for term trackers and 3 year fixed rates. For limited company borrowers choosing 5 year fixed rates, the pay rate will be used.
David Whittaker adds:
“We’ve also improved our criteria for landlords looking to finance larger multiunits. We’re accepting six flats in a block as standard and we’ll consider up to eight on a case-bycase basis. Keystone is tackling market changes head on.”