Remortgaging continues to drive buy-to-let activity

Remortgaging continues to drive the buy-to-let market, with the proportion of buy-to-let mortgages for remortgages rising to 52% in the fourth quarter of 2017, according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index report.

The index, based on interviews with 198 mortgage intermediaries, found that the number of mortgages for first time landlords decreased again in Q4 2017, down to 12%, the lowest recorded figure since 2008.

Despite a slight fall in Q4 2017, the principal reason for obtaining a buy-to-let remortgage is still for a better interest rate, making up over half - 55% - of all cases.

Some 35% of landlords, the lowest figure recorded, used a buy-to-let remortgage to raise capital in the same period, as the disparity widens between the two reasons that were level at 45% just two years ago.

The research also shows that more buy-to-let landlords are opting for longer term deals, with preference for initial product term of five years or more overtaking two year deals for first time, with 48% of mortgages written in Q4 2017 for five years or more.  

Conversely, two-year terms, which have been the overwhelming preference over the last five years, made up 40% of fixed and tracker cases in Q4 2017, down 7% on the previous quarter and 14% on its peak, achieved in Q3 2013 and Q3 2014.

Fixed rate mortgage products hit another record high at 91% of all cases

John Heron, managing director of mortgages at Paragon, said: “The results of our latest intermediary research highlight the overwhelming preference that the market has for fixed rate products and increasingly for longer term fixed rate products.

“Much of this is driven by the understandable requirement that landlords have for payment stability into the future against an uncertain economic backdrop.”

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