Landlord remortgaging reaches all-time high
The proportion of landlords looking to remortgage is now at an all-time high, Paragon’s Financial Adviser Confidence Tracking (FACT) Index has found.
There’s been a sharp increase in the proportion of landlords remortgaging in Q3, up from 49% in the Q2 to 57% of all buy-to-let business. In contrast, the proportion of first-time landlord business fell from 14% to 10% and landlords looking for finance for portfolio expansion was down from 23% to 19% of the total.
John Heron, managing director of mortgages at Paragon, said: “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.
“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.”
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 the Summer Budget.
Since then, remortgaging has continued to rise almost inexorably and today six out of 10 intermediaries said the main reason that landlords are remortgaging is to secure a better interest rate.
In total, buy-to-let represented 19% of intermediary business in this quarter with the remainder taken up by mortgage applications from owner-occupiers.