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Lenders urged to meet demand for specialist BTL mortgages

Gareth Richardson

New research has revealed a disconnect between what landlords want and lenders’ specialist buy-to-let products.

Software firm Finova says while landlords are exploring HMOs, short-term lets, holiday lets, and setting up limited companies, the largely one-dimensional nature of traditional buy-to-let mortgages is struggling to accommodate borrowers with more complex needs.

Its poll of lenders and brokers reveals that although lenders recognise specialist buy-to-let offerings require more tailored technological-driven support, implementation remains frustratingly low, with more than one in three lenders citing technological difficulties as a barrier to growth.

As the market shifts from casual investors to seasoned professionals, Finova believes lenders must embrace a data-driven, digital-first approach.

Intentions

Its research reveals a disconnect between lenders’ intentions to innovate and their actual investments. More than three-quarters (78%) of lenders – rising to 83% among building societies – said their appetite for innovation is stronger than two years ago. Yet lenders remain cautious, citing limited broker demand (41%) and regulatory constraints (45%) as the main barriers.

Finova found that concerns around a lack of demand are unfounded. Over the past year, 63% of brokers reported increased demand for specialist BTL products, with 75% seeing a particular surge in limited company BTL products.

Products

CEO Gareth Richardson says it’s clear from the research that lenders are eager to introduce new products to the market to meet demand. However, they are hampered by regulatory, margin, and technological restraints, compounded by uncertainty over where borrower demand truly lies.

“Many lenders are focusing on broker portals and other support tools, but the real opportunity lies in investing in the products the market is craving, like specialist BTL, and in the technology needed to accelerate service and product development,” adds Richardson.

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Btl mortgages

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