There was a sharp rise in remortgaging activity during the first three months of 2018 as buy-to-let landlords lock in lower interest rates.
Paragon’s latest Financial Adviser Confidence Tracking index shows that the number of landlords remortgaging is approaching record levels.
The index, based on interviews with 201 mortgage intermediaries, reveals that 52% of buy-to-let mortgage cases in the first quarter of the year were for landlords seeking to remortgage, up from 29% in the corresponding period in 2015, prior to wide-ranging tax changes being announced in the summer budget.
Over the same time period, intermediaries say they have seen a drop in the proportion of mortgage applications from first-time landlords, down from 19% to 13% of the total.
Meanwhile, there has also been a fall in landlords remortgaging to raise funds to acquire new properties, with remortgaging for portfolio expansion falling from 39% to 22%.
The proportion of landlords seeking to secure a better interest rate reached the highest level ever in Q1 2018, with 60% of landlords applying for that reason.
John Heron, managing director of mortgages at Paragon, said: “There’s a wide range of factors contributing to the surge in landlords remortgaging 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 affordabilty 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.”
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