The proportion of buy to let investors looking to remortgage is now at an all-time high according to respected specialist mortgage lender Paragon.
Its quarterly market tracker, based on 200 mortgage intermediaries and operating for the past 23 years, found that in the third quarter of 2018 there was a sharp increase in the proportion of landlords remortgaging.
It rose from 49 per cent of the Paragon inermediaries’ business in the second quarter of this year to 57 per cent in the third.
By contrast, the proportion of first-time landlord business fell from 14 per cent to 10 per cent and landlords looking for finance for portfolio expansion was down from 23 per cent to 19 per cent of the total.
The proportion of landlords remortgaging first outstripped those seeking funds for portfolio expansion back in 2015 following the announcement of significant tax changes for landlords in that year’s Budget.
Since then, remortgaging has continued to rise almost inexorably and today six out of 10 intermediaries say the main reason that landlords are remortgaging is to secure a better interest rate.
In total, buy to let represented 19 per cent of intermediary business in this quarter, with the remainder taken up by mortgage applications from owner occupiers.
“Landlords are investing less in the private rented sector which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford. This is clearly a response to the increase in costs that landlords face following changes to stamp duty and tax relief on finance costs” explains John Heron, managing director of Mortgages at Paragon.
“It’s no surprise therefore to see that landlords are taking the opportunity to reduce their mortgage finance costs as one part of their strategy to mitigate the impact of higher taxation. Tax bills due in January 2019 will include the first phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead.”