Mortgage Experts Predict Growth in Buy-To-Let

One of the leading mortgage lenders in the UK, Paragon Bank, is expecting to see an increase in mortgage applications over the next 12 months, according to their FACT research.

In Q4 2019, 24.5% buy-to-let mortgages were written for landlords looking to extend their portfolios, the highest level since Q1 2017.

Paragon notes that recent tax changes are forcing landlords to look for more efficient ways to organize their business, which is creating a greater demand for mortgage products for incorporated and limited liability partnerships. The consumer insight company BVA BDRC’s research shows that landlords expecting to purchase property in a limited company structure has almost doubled in under two years.

Paragon’s Financial Advisor Confidence Tracking index (FACT) highlights intermediaries’ general views on the performance of the mortgage market and on developing trends.

The latest research, published for Q3 2019 shows that brokers expect to do 1% more buy-to-let business in the next 12 months, compared with the last 12 months, the highest figure since Q3 2018 and an increase of 2% on the previous quarter.

Richard Rowntree, managing director of mortgages at Paragon, said: “Buy-to-let lending has been driven by remortgage business in recent years, so it’s great to see the proportion of lending for portfolio extension purposes increase and hit its highest level for nearly three years.

“It’s also encouraging to see that the balance of brokers expecting to write more buy-to-let business is positive for 2020 as confidence has been subdued for much of the past four years. These are green shoots and we hope that they will continue throughout this year on the back of a more certain regulatory, economic and political environment.”

Other notable findings from the research are that the most popular type of mortgage are fixed rate mortgages, with an 89% rate of preference, compared to tracker rate mortgages with just 9%.

Mortgages with initial fixed periods of five years or more have gained significantly in popularity over the last five years, climbing from 30% to 46% of all new mortgages.

The most popular kind of consumer with specialist requirements in Q3 2019 were the self-employed, taking 22% of mortgages introduced for buyers with specialist requirements up 2% on Q2 2019 and maintaining the long-term trend.

 

 

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