The number of landlords remortgaging is running close to record levels, according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index.
Intermediaries reported that 52% of buy-to-let mortgage cases in Q1 2018 were for landlords seeking to remortgage, a sharp increase from the 29% reported in Q1 2015.
During the same period, intermediaries said that they have seen a drop in the proportion of mortgage applications from first-time landlords, down from 19% to 13% of the total. There has been an additional decline in the number of landlords remortgaging to raise funds in order to expand their portfolios, falling from 39% to 22% between Q1 2015 and Q1 2018.
Among those landlords looking to remortgage, the number seeking to secure a better interest rate reached the highest recorded level in Q1 2018. Compared to three years ago when equal numbers of landlords were remortgaging for a better rate and to raise capital, in the first quarter of 2018, 60% of landlords said securing a better interest rate was their primary objective.
In contrast, just 30% of landlords claimed that raising capital was their top priority.
Paragon managing director of mortgages John Heron said: “There’s a wide range of factors contributing to the surge in landlords remortgaging at the moment. These include the expiry of the initial term on mortgages taken out ahead of the stamp duty changes for second properties, the expectation of rate rises on the horizon and a desire to minimise interest costs in the face of new mortgage affordabilty rules. It will be interesting to see the extent to which mortgage applications for purchases and portfolio extensions increase once these factors have played out.”
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