Broker's top tips for the market in 2025
Social housing buy-to-lets will be the next big thing in the mortgage market in 2025 and are already showing growth in demand, according to brokerage director Joseph Lane.
Lane (pictured), who founded Mortgage Lane - a team of commercial and residential mortgage brokers - also identifies increasing demand for HMO (house in multiple occupation) projects, and an influx of new landlords coming into the market.
Based in Newport, South Wales, the brokerage specialises in supporting property investors, developers and business owners.
“Social housing buy-to-lets have become increasingly popular with borrowers,” Lane told Mortgage Introducer. “Due to their lack of void period, low management and hand back policy it may appear to be a lucrative investment to some borrowers.
“We are seeing more and more lenders offering mortgage products to social housing buy-to-lets, or mentioning their plans to do so, which may target properties leased to a housing association for two to five years, then sub-let to vulnerable tenants. Lenders are slowly signing off their policy around vulnerable customers.”
Interest has increased in HMO (house in multiple occupation) projects too, Lane said, with a lot of borrowers undertaking refurbishments costing in excess of £100,000.
“I am seeing a lot of HMO landlords and new HMO owners breaking into the market to compete on higher standards,” he shared. “Interest rates are impacting affordability for buy-to-let borrowers. Some buy-to-let property owners are barely breaking even.
“With interest rates rising, borrowers are looking to higher yielding strategies to make profits, such as Airbnb lets and HMO properties.”
It is a priority for investors to recover their investment in full or in majority on a remortgage, Lane noted.
“To give borrowers the best chance of up valuing the property, to recover their investment on 75% of the valuation, it is important that they get the most generous methodology,” he said.
How is the mortgage market performing?
Taking the mortgage market as a whole, Lane considers it is in good shape.
“The market in general is strong,” he said. “Borrowers seem to be adjusting to the new landscape out there with interest rates, and property investors are finding profitable deals with finance available to the general public.”
Lane anticipates a boost to confidence as market conditions improve, despite some unsettled movement on rates over the past couple of weeks.
“Lenders have been reactive to rates as we approach the autumn budget,” he reflected. “This will stabilise, and I believe we will see rates coming down further into 2025.
“If the rates continue to reduce then we will see a lot more confidence in home movers, and property investors able to make purchases work with better returns on investment, and property prices starting to escalate once any changes in the budget have settled.”
Read more: UK rents hit a record high - Hamptons
How can mortgage brokers maximise business?
Turning to how his broker colleagues could maximise business in the current climate, Lane advised that they need to focus on those products which show particular demand in the current market.
“Whilst there may be a reduction in certain demographics moving house, there is demand with products amongst first-time buyers, property investors and business owners,” he said. “Brokers should be proactive with product transfers, to avoid borrowers going direct to their lender.”
Mortgage Lane was founded in 2018 and directly authorised by the Financial Conduct Authority (FCA) in 2021. It has established relationships with Hampshire Trust Bank, Interbay and Foundation Home Loans, and has just announced a new strategic partnership with Shawbrook Bank, which will allow it to have more control over valuation instructions and access to exclusive rates, Lane explained.
“As a strategic partner, we also have the ability to sacrifice a proportion of procuration fees,” he said. “Given that strategic partners have enhanced procuration fees, they may also have more room to manoeuvre against competition or to win business from other lenders.”
