The volume of buy-to-let investors and demand is set to drop during the first quarter of 2017, according to Mortgages for Business.
Alterations to residential tax relief for residential landlords, alongside the introduction of tougher mortgage lending conditions, are set to see the market become more subdued.
Buy-to-let lending rose during the final quarter of 2016, with the share of lending for acquisitions in the market rising from 28% in Q3 to 38% in Q4, according to the most recent Mortgages for Business complex buy-to-let index.
Steve Olejnik, chief operating officer of Mortgages for Business, noted: ‘There was an obvious incentive for landlords to do business in the final quarter of 2016, which led to an increase in buy-to-let borrowing.’
With mortgage tax relief to be phased out from April and with the Bank of England’s Financial Policy Committee being granted more powers, many buy-to-let investors are set to be further deterred.
As such, the Bank of England’s latest Credit Conditions Survey suggests that activity levels will slow during the first three months of the year.
Charles Haresnape, group managing director, mortgages at Aldermore, noted: ‘While availability of secured credit to households is expected to increase slightly over the next few months, this is likely to be moderated in the mortgages market by recent changes to affordability checks by lenders.’
‘The overall picture for 2016 showed that demand for buy-to-let borrowing rose significantly despite the tax changes introduced in April 2017 is unlikely to show significant increases in mortgage volumes, but we can expect to see a continued but slower upward trend over the next year,’ he added.