Saturday, August 13, 2022

Stronger demand from UK landlords for buy to let mortgages

The demand for buy to let mortgages is strong in the third quarter of 2017

Following a sharp decline in the previous year, the demand for buy to let mortgages was stronger in the third quarter of 2017, with the figure going up 1 per cent, the latest report on intermediary activity says. As mortgage activity increased in the quarter, the overall confidence amongst mortgage intermediaries reached its highest levels since 2015, shows the Financial Advisers Confidence Tracking (FACT) Index report from Paragon.

The average number of mortgages per advisor in the quarter was 24, up 9 per cent on the previous quarter and 8 per cent on the previous year, making the figures the third highest recorded figure since the financial crisis of 2008. At 36 per cent, remortgaging remained the most common form of borrowing, while buy to let borrowing was 17 per cent and first time buyers went up 1 per cent during the quarter.

At present, mortgage advisors expect 2.4 per cent more business on an average during the fourth quarter of this year. It is expected that the number of cases in the next three years will stay at four, signaling the continuation of the upward trend after two years of downward trend between 2014 and 2016. Approximately half of the brokers expect that compared with the last 12 months, the buy to let business will stay the same in the next 12 months.

Although, mortgage advisors expect 3 per cent fall in the buy to let mortgage category, it will still be more than the historic low of 6 per cent in the first quarter of 2016. Approximately 9 per cent of intermediaries reported strong to very strong landlord demand for buy to let properties, an increase of 3 per cent, while 53 per cent contradicted the trend, expecting the demand to be weak to very weak, similar to figures in the second quarter of 2017.

In line with the steep hike in the remortgaging trend since the fourth quarter of 2013, there has been a long term decline of first time landlords. The number of such landlords grew slightly from a near record low of 13 per cent in the second quarter of 2017 to 14 per cent in the third quarter. During the same period, 56 per cent of landlords remortgaged to achieve better interest rates, while 33 per cent of landlords did the same for raising capital.

The managing director of mortgages at Paragon, John Heron said that a wide variety of recent data on housing has pointed to a market that has been finely balanced. Low transaction numbers have been bolstered by higher numbers of first time buyers, house prices outside London have been creeping up and landlord activity has stabilised. He added that these trends are confirmed by the firm’s latest intermediary survey with confidence now at the highest level for some time. Despite a rather uncertain environment intermediaries are seeing higher levels of remortgage activity and at least stable demand from buy to let landlords.


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