Lenders have their eye on BTL mortgage applications

Lenders have their eye on BTL mortgage applications

Mortgage lenders are on the lookout for fraudulent buy-to-let mortgage applications in the wake of tighter affordability rules for residential mortgages under the Mortgage Market Review (MMR).

Borrowers who can’t secure residential mortgages under MMR might try to secure an unregulated buy-to-let mortgage instead, according to a panel of industry experts at the Financial Services Expo Manchester last Thursday.

James Chidgey of Nationwide Building Society, Martin Reynolds of Simplybiz and Charles Haresnape of Aldermore all warned of the potential danger.

Reynolds pointed out that gaming is "fraud", while Haresnape warned mortgage brokers that the Financial Conduct Authority FCA is "keeping a big eye on this".

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries (AMI), told of a lender that had rejected a residential mortgage application only to receive a buy-to-let application from the same borrower for exactly the same property just three days later.

Most panel members agreed the buy-to-let market would grow in 2014 and beyond.

This follows recent figures showing the number of mortgages for landlords has risen 56% in the past year.

Also speaking at the debate, David Whittaker of Mortgages for Business said: “Buy-to-let is coming from a strong performance in 2013 with £21.5 billion of business which is about 12% to 13% of total gross lending.

"However, we might get up to £28 billion this year which would be around 15% of the total market.”

Other panel members were less than enamoured with the growth of buy-to-let.

Rob Jupp of Brightstar Financial said: “I think the expansion of the buy-to-let market is the root cause of the problems we have in the housing market. I don’t think it’s a great thing that the buy-to-let market is growing.”