A recent piece of research amongst mortgage brokers found that some 55% of buy-to-let mortgage applicants are unaware of the impending changes to mortgage rules. 62% of applicants were unaware of either the changes to the way mortgage tax relief will be reduced in line with the basic rate by 2020 or the Mortgage Credit Directive which came into force on the 21st March. This figure rises significantly to 71% amongst accidental landlords.
Given the high proportion of accidental landlords in the market, who account for roughly a fifth of new mortgage applications, not having the most up to date information could have a large impact on their ability to secure a mortgage.
As the lending market becomes more specialised, customers are increasingly likely to approach an intermediary for advice on the best way to proceed, with polling from the end of last year showing that brokers predicting a steady increase in their market share. Lenders will need to adapt to this evolution to make sure that they have strong lines of communication with intermediaries whenever any new legislation is implemented.
An ideal model for a broker regarding changes such as these is to consider where they can expand the advice available to a client. There may sometimes be a feeling in the market that only those with sophisticated needs require advice, but there is a general awareness that customers may not be fully up to date. Alerting customers to additional areas that they may want to consider will make sure that they are well-placed for years to come.
While many lenders have been ahead of the curve in alerting their broker panels and customers to recent changes in the market, the figures indicate that there is still plenty more to be done, and it is the responsibility of all lenders and intermediaries to ensure that the proper information is made available to customers.
Attributed to Charles Haresnape, Group Managing Director, Mortgages, Aldermore
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