Paragon: record number of landlords remortgaging for a better rate

14th December 2017

Confidence among mortgage intermediaries reached its highest level since 2015 in the third quarter of 2017 as mortgage activity increased, according to Paragon’s latest Financial Advisers Confidence Tracking (FACT) Index report.

The FACT Index scored 105.9 in the third quarter, the first increase for a year and the highest score since thr fourth quarter of 2015, and the second successive quarterly increase.

This is partly due to increased activity in the mortgage market, with the average number of mortgages introduced per advisers’ office up 9% on the previous quarter and 8% on the previous year. This is the third-highest recorded figure since the 2008 financial crash, and maintains the long-term recovery from a record low of 14 in 2009.

Remortgage remained the most common type of borrowing, with a slightly reduced majority of 36%. There was little fluctuation in all other borrower types, with buy-to-let borrowing stable again at 17% (up 1%) in the third quarter following a sharp decline in the previous year. First-time buyer activity also saw a 1% increase on the quarter and maintains a modest long-term upward trend over the last decade.

On average, mortgage advisers expect to do 2.4% more mortgage business during the fourth quarter of 2017, maintaining the reversal of a two-year downward trend between 2014 and 2016.

Remortgaging remained them most popular reason for obtaining a buy-to-let mortgage, accounting for a slightly reduced majority of 50% of all buy-to-let business. The steep upward trend in remortgaging since the fourth quarter of 2013 has been matched by a long-term decline of first-time landlords, which grew slightly from a near-record-low proportion of 13% in the second quarter of 2017 to 14% in the third quarter.

Brokers reported a record number of landlords remortgaging to achieve a better interest rate, accounting for 56% of all cases, while a historic low of 33% of landlords remortgaged for the purpose of capital-raising in the same period.

John Heron, managing director of mortgages at Paragon, said: “A wide variety of recent data on housing has pointed to a market that has been finely balanced. Low transaction numbers have been bolstered by higher numbers of first-time buyers, house prices outside London have been creeping up and landlord activity has stabilised.

“These trends are confirmed by our latest intermediary survey with confidence now at the highest level for some time. Despite a rather uncertain environment intermediaries are seeing higher levels of remortgage activity and at least stable demand from buy-to-let landlords.”

*2 year fixed with TSB 1.09% then 3.59% - APRC is 3.3% Max LTV is 60%. Quoted on 27th May 2020.