Posts with tag: buy to let mortgages

Mortgage sentiment is improving, but buy-to-let business is down, according to Paragon Mortgages’ latest Financial Advisors Confidence Tracking (FACT) Index report, based on interviews with around 200 mortgage intermediaries.

The improvement in confidence arrives despite a reduction in the volume of business being written in the third quarter (Q3), with the latest data showing that the number of mortgages introduced per office has dropped from an average of 24.7 in Q2 to 21.8 currently. There has also been a corresponding drop in the average number of advisors per office, from 3.7 in the previous quarter to three in Q3.

Mortgage Sentiment Improving, but Buy-to-Let Business is Down

Confidence around future business has shown some improvement, however, following a summer of uncertainty caused by Government intervention in the buy-to-let sector and Britain’s vote to leave the EU.

Asked how much mortgage business they expect to complete over the coming quarter, more than third of intermediaries (34%) expect to do more business, compared to 7% who expect to do less. On average, intermediaries expect a 2.1% rise in business through the next quarter. In Q2, intermediaries predicted a 0.8% increase in business.

Sentiment in the buy-to-let sector remains mixed, however, following multiple Government and regulatory interventions. The proportion of intermediaries describing landlord demand as strong or very strong has improved, rising from 5% in Q2 to 9%.

However, 46% of intermediaries describe demand for buy-to-let mortgages as weak or very weak, suggesting that there is some way to go before sentiment recovers to levels recorded prior to recent Government announcements on Stamp Duty and mortgage interest tax relief.

Likewise, almost half of all buy-to-let business (44%) comprises remortgages, while just a quarter (25%) is for portfolio extension. This figure is down from 26% in the previous quarter, and 33% in Q4 2015.

A recent study by the Council of Mortgage Lenders paints a picture of the average UK landlord’s future plans: /cml-paints-picture-average-uk-landlord/

The Managing Director of Paragon Mortgages, John Heron, says: “While there has been some seasonal reduction in business volumes among intermediaries, there has also been a definite improvement in sentiment about likely future business. This comes on the back of a summer of uncertainty in the property market, and the economy more generally, following the vote to leave the EU.

“While any improvement in sentiment is to be welcomed, the latest data does indicate that confidence remains muted, especially in the buy-to-let market. Although intermediaries are reporting an increase in demand from landlords, a growing proportion of this demand is for remortgages, and buy-to-let purchases remain at low levels.”

He warns: “At a time of high demand for private rented sector properties, this dynamic could lead to reduced supply, higher rents and put greater pressure on the housing market.”