Another pertinent consideration for the bank is the slowdown of the buy-to-let market – resulting from a host of unfavourable tax changes and the tightening of underwriting standards by the Prudential Regulation Authority.
TSB reacted by upping its buy-to-let interest coverage ratio from 125 per cent to 145 per cent last summer.
The lender did not allude to the financial impact of the various changes to its buy-to-let business in its latest annual results, nor did it outline how much the division contributed to the aggregated customer lending figure. However, Mr McCormack said the bank is still generating the “required amount”.
He added: “Like every lender, we are faced with the new PRA’s regulation around portfolio buy-to-lets and each lender needs to decide if they want to be in that market going forward.
“We are currently working on our plans and we expect to announce something, probably in the summer.”
He was coy on what these plans entailed and if they involved a withdrawal from the buy-to-let market altogether, but Mr McCormack gave a cryptic hint stating: “Our proposition is about giving brokers as much choice as possible, so I’ll let you read in between the lines.”
Mr McCormack added the changes have levelled the playing field between first-time buyers and landlords. He added that activity in the first-time buyer market has peaked at a 10-year high, and revealed the lender will seek to better tap into the market by expanding its offering for aspiring homeowners.
Another burgeoning area is buy-to-lets through limited company vehicles, which have benefitted from being exempt from the changes to income tax relief and the PRA affordability guidelines.
Mr McCormack said: “Our belief is it [limited company buy-to-lets] will remain niche for the foreseeable future. Most landlords will probably stay within their current ownership structure because it is very expensive to move it into limited company.”
ROLAND MCCORMACK'S CAREER LADDER
2014-present
Mortgage intermediary director
TSB Bank
2010-2014
Partner
The McCormack Partnership
2009-2010
Managing director
Connell Group – Asset Management and LPA Receivers
2006-2009
Director
Safe Home Income Plans
2001-2005
Managing director
Bank of Ireland Mortgages
