The gap between broker demand and lender innovation in the specialist BTL market continues to grow: Finova – Mortgage Strategy
There is a growing gap between agent demand and lender innovation in the specialist buy-to-let (BTL) market, Finova has revealed.
New data from Finova’s New Foundation: Building the Next Era of BTL Lending report shows that over the past year, 63% of brokers reported an increase in demand for specialist BTL products, with 75% seeing a particular surge in demand for limited company BTL products.
But lenders remain cautious, citing limited broker demand (41%) and regulatory restrictions (45%) as key obstacles.
Among specialist lenders, 63% said a lack of demand from brokers was holding back innovation, exposing a mismatch between market demand and what lenders offer.
When asked about barriers to innovation in specialist BTL, more than a third (38%) cited technological challenges, suggesting that many lenders are still grappling with legacy systems that can slow product development or limit their ability to respond quickly to borrower needs.
With market volatility affecting product design and impacting risk appetite, 36% of lenders cited changing swap rates as the biggest barrier.
At the same time, 35% of respondents reported margin pressure or low affordability, highlighting the challenge of balancing competitive pricing with viable returns.
Research points to a disconnect between lenders’ intentions to innovate and their actual investments.
More than three quarters (78%) of lenders surveyed (rising to 83% among building societies) said their interest in innovation is stronger than two years ago.
However, only 15% of lenders are prioritizing investment in entirely new product types and only 11% are focusing on faster decision-making engines, which Finova believes may be a missed opportunity for innovation.
When considering investment priorities, 21% of lenders direct investments into brokerage portals and communications tools.
However, brokers said the biggest areas of under-delivery were elsewhere: 48% cited flexibility for complex borrowers and 43% cited speed of service, suggesting brokers and lenders’ business goals are also misaligned.
Gareth Richardson, chief executive of Finova, said: “We are seeing a real shift in the specialist BTL market, with brokers responding quickly to growing investor demand. However, the flip side is that many lenders are still catching up.”
“The gap is not a lack of ambition, but the direction of investment. Many lenders are focusing on brokerage portals and other support tools, but the real opportunity lies in investing in products that the market is hungry for, such as specialist BTL, and the technology needed to accelerate service and product development.”
“There is huge potential here, and those who can adapt quickly and with confidence will become leaders in the professional BTL space.”
Last month, Finova appointed Daniel Broadhurst as commercial director. Broadhurst has 20 years of banking and financial services experience.
