A month on from Moda Mortgages’ buy-to-let (BTL) soft launch, Andrew Arwas (pictured) sits down with Specialist Lending Solutions to discuss the lender’s big plans for 2025.
Launching a BTL lender less than a year after lending volumes more than halved is a gutsy move, but one that Moda Mortgages has spent three years planning for.
Moda is part of the Chetwood Bank family, the bank behind the recent acquisition of CHL Mortgages, a long-standing player in BTL.
Andrew Arwas, who acts as managing director of mortgages across both brands, has far-reaching plans for Moda that will eventually cross over into other specialist lending markets, including the residential mortgage sphere.
But, right now, he has his sights firmly set on the task at hand.
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Building up BTL
“Our first job is to fulfil our ambitions in buy to let,” said Arwas.
Since the soft launch on 9 October, distributing products through 10 packagers, Moda has received a lot of house in multiple occupation (HMO) applications.
The lender’s target borrowers are professional landlords who are in varying stages of their property investment careers.
Arwas said: “Our borrowers are more likely to have a portfolio and are beginning to make a business of it or they’ve transitioned from being an accidental [landlord] or small landlords to… making a living from their portfolio.”
Most of Moda’s applications will come from landlords who have already incorporated their BTL businesses using simple special purpose vehicles (SPVs). More complex structures fall under the remit of CHL Mortgages.
Embracing automation
Before developing the proposition, Moda spoke to over 500 brokers, and a clear message emerged.
“Every hour is an opportunity to make money or not and uncertainty over whether a case will be accepted or not is potentially a waste of their time,” said Arwas.
Moda is embracing automation at every opportunity in the mortgage process to deliver on this commitment.
“We’re seeking to give as much certainty as possible and reduce the possibility of a late no, which is the worst outcome for the broker,” Arwas added.
At the decision in principle (DIP) stage, Moda has built in the automation of much of its key policy decisioning without making the process too long.
Each DIP is accompanied by an automated valuation model (AVM), which is then shared with the broker, giving them transparency over which direction the decision is likely to go. Although Moda requires its cases to have a physical valuation before an offer can be issued, as long as that matches the AVM, the case can proceed.
‘Smarter, faster, simpler’
With an ethos of “smarter, faster, simpler”, Arwas says Moda’s objective is remove any unnecessary friction in the process and draw as much data from sources such as credit reference agencies, the AVM or Companies House, as possible.
“Knowing how to use technology and data to optimise decision-making is very much in the DNA of Chetwood,” he added.
“But that has to be tempered a little in the mortgage market because it isn’t a seven-second decision.
“So while we can make it as easy as possible for the broker, borrower and for our internal teams by using automation, we’re not attempting to get around the fact that there is a judgement by an experienced underwriter who can take a look at the whole picture.
“All we’re trying to do is avoid [a] situation where a broker is spent hours on the case, giving advice, completing the application and sourcing more documents for us and five days later we say no,” he noted.
But technology alone isn’t going to be Moda’s USP. Arwas says through the lender’s digital tools and its people, he wants Moda to be remembered for always delivering high-quality service to brokers.
Big ambitions
With the proposition up and running and restricted distribution underway, the next stop is to scale up by adding clubs and networks to its distribution panel early in the new year.
A long-term goal is to give brokers the option to deal with them directly.
Speaking of Chetwood Bank’s both brands, Arwas said: “The ambition over the course of a few years is to be able to call ourselves one of the leading specialist mortgage lenders in the UK.”
Residential mortgages, regulated and unregulated bridging and semi-commercial and commercial lending are all on the table for the future. Only being active in BTL markets can expose the lending operation to risk, he explains.
But this isn’t something Arwas has planned for Moda, which is still in its BTL infancy, just yet.
So he’s not put off by the Chancellor’s recent Budget blow for landlords who must now pay a 5% stamp duty surcharge or last year’s dismal BTL lending figures?
Arwas says volumes in the specialist sector have held up a little better than in the vanilla space.
And, in the last six months, he’s seen trends towards growing professionalisation and portfolios, which plays to Moda’s strengths alongside increasing demand for purpose-built and luxury HMOs and multi-unit blocks (MUBs), both markets the lender is ready to serve.
He also sees landlord affordability constraints begin to ease. Rents are rising as mortgage rates have fallen.
In the round, he says, much more positive conditions are emerging for lenders and landlords.
And does Chetwood have its eyes on any further lender acquisitions in the future?
“We’re always open to looking at opportunities,” said Arwas. Time will tell.
