Paragon's buy-to-let lending drops by a third

Buy-to-let lending by Paragon plunged by nearly one-third in the second quarter of this year.

An interim management statement shows it advanced £45.1m of new buy-to-let loans in the second quarter, down 31.1% on the £65.7m lent in the same period last year.

At the same time, it has emerged that nearly one in ten residential property investors have been told by their existing lenders to find a BTL mortgage elsewhere.

The finding is in new research by specialist broker Mortgages for Business.

It says that 8% of investors revealed they have been asked by lenders to refinance elsewhere, largely as a result of RBS which is looking to reduce its exposure to property and Bradford & Bingley which is looking to exit the market entirely.

Mortgages for Business researchers also found that, despite mortgage difficulties  six in ten property investors plan to expand their portfolios by the end of this year.

But over three-quarters of them feel mortgage lenders should be doing more to help them.

Their main gripes were with rates, fees and LTVs. Landlords are also looking for more innovative lending, including more products for limited company applicants, products for holiday lets and more lending to expats. Landlords were also interested in seeing more case-by-case underwriting rather than computer-based lending decisions.
 
Just over half (54%) of investors who are planning to expand revealed they will need to refinance their existing properties. Of these, 20% say they will struggle to secure finance because of a lack of equity, reflecting the dearth of high LTV mortgages in the market.

As of June, there were only four 85% LTV mortgages available (from Kent Reliance).
 
In a similar exercise, by investment property specialists Young Group, it emerged that nearly half (44%) of property investors with portfolios in London are considering adding to their portfolios over the next 12 months.

However, outside London, only 18% are consider making property purchases.

The research also found that for the first time since Q4 2007, more investors are considering making overseas purchases (29%) than making purchases in the UK’s regions.
 
Of those not considering additional acquisitions over the coming 12 months, the overwhelming majority state funding issues as the main barrier.

Investors remain committed to their purchases, the research found, with 34.5% intending to hold their properties for at least the next 20 years and 58.2% for the coming decade.
 
Young Group, based in London, did its research among 500 property investor clients.