Lower interest rates available to buy-to-let landlords have resulted in a significant increase in remortgaging activity during the last three months. The latest Financial Adviser Confidence Tracking (FACT) Index, released by Paragon Banking Group, reveals that the amount of landlords remortgaging is approaching record levels.
Based on interviews conducted with 201 mortgage intermediaries, the index has disclosed that 52% of buy-to-let mortgage cases in the first quarter of the year were for landlords intending to remortgage. This is an increase from 29% in the corresponding period for 2015, prior to the wide-ranging tax changes being announced in the Summer Budget.
Intermediaries have reported a decrease in the proportion of mortgage applications from first-time landlords in the same period, down from 19% to 13% of the total.
Moreover, there has been a decrease in the number of landlords remortgaging to raise funds with a plant to acquire new properties. Those opting to remortgage for portfolio expansion has fallen from 39% to 22%.
These interviews have also revealed that 60% of landlords applied for remortgages with the intention of securing better interest rates, reaching a record high in the first quarter of 2018.
When questioned, only 30% had responded that they were remortgaging in order to raise capital.
John Heron, Managing Director of Mortgages at Paragon has commented: “There’s a wide range of factors contributing to the surge in landlords re-mortgaging 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 affordability 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.”