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Proportion of Landlords Remortgaging Hits an All-Time High
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The proportion of landlords remortgaging has now hit an all-time high, according to the latest Financial Adviser Confidence Tracking (FACT) Index from Paragon, covering the third quarter (Q3) of the year.
Paragon has been capturing the experience and views of approximately 200 mortgage intermediaries on the development of the UK mortgage market each quarter since 1995.
The latest survey highlights a sharp increase in the proportion of landlords remortgaging, which is up from 49% in Q2 to 57% of all buy-to-let business in Q3.
In contrast, the proportion of first time landlord business dropped from 14% to 10% over the same period, while the amount of landlords looking to finance portfolio expansion was down from 23% to 19%.
The number of landlords remortgaging first outstripped those seeking funds for portfolio expansion back in 2015, following the announcement of significant tax changes for buy-to-let in the Summer Budget.
Since then, remortgaging has continued to rise almost inexorably and, today, six out of ten intermediaries say that the main reason for landlords remortgaging is to secure a better interest rate.
In total, buy-to-let represented 19% of intermediary business in Q3, with the remainder taken up by mortgage applications from owner-occupiers.
John Heron, the Managing Director of Mortgages at Paragon, comments: “Landlords are investing less in the private rented sector, which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford. This is clearly a response to the increase in costs that landlords face, following changes to Stamp Duty and tax relief on finance costs.
“It’s no surprise therefore to see that landlords are taking the opportunity to reduce their mortgage finance costs as one part of their strategy to mitigate the impact of higher taxation. Tax bills due in January 2019 will include the first phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead.”
