More landlords taking out mortgages to expand

Tuesday 31st July 2012

Mortgage brokers are reporting an increase in landlords applying for buy-to-let mortgages to expand their rental property portfolio.

The Paragon Mortgages quarterly FACT survey asks intermediaries for their feedback on the mortgage market but also for their views on landlord demand, buy-to-let application levels and the availability of buy-to-let mortgage finance.

Mortgage intermediaries who took part reported the most popular reason for landlords applying for a buy-to-let mortgage was to expand their portfolios (44%) – the highest proportion in a year.

The number of landlords looking to remortgage also increased in the second quarter from 31% to 32%, while the number of first-time landlords applying for a buy-to-let mortgage fell from 23% to 20%.

More than half the brokers (53%) said they would describe demand as stable, but 22% described it as strong.

Buy-to-let mortgage business outstripped first-time buyer business for brokers, with 20% of their business being buy-to-let, and just 16% being first-time buyers. A total of 36% business was in remortgaging, ahead of next-time buyers at 26%.

John Heron, managing director of Paragon Mortgages, said: “Levels of buy-to-let mortgage business are healthy at the moment, but could be better. The market is still being affected by the wider financial markets and factors such as the Eurozone.
 
“However, we have made great strides in recent months and it is encouraging to see the percentage of landlords expanding their portfolios increasing.”