Stronger demand seen from UK landlords for buy-to-let mortgages in third quarter of 2017
There was stronger demand from landlords in the UK for buy to let mortgages in the third quarter of 2017, up 1% following a sharp decline in the previous year, according to the latest report on intermediary activity.
Confidence amongst mortgage intermediaries overall reached its highest level since 2015 as mortgage activity increased in the quarter, the Financial Advisers Confidence Tracking (FACT) Index report from Paragon also shows.
The average number of mortgages introduced per advisers’ office in the quarter was 24, 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.
Remortgaging 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 at 17% and first time buyers also seeing 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 in the fourth quarter of 2017, with the expected number of cases in the next three months stable at four, maintaining the reversal of a two year downward trend between 2014 and 2016.
Some 50% of brokers said that compared with the last 12 months they expect buy to let business to stay the same in the next 12 months. On average, mortgage advisers expect to do 3% less buy to let mortgage business in that period, the same as the second quarter of 2017 but comfortably higher than the historic low of 6% seen in the first quarter of 2016.
For buy to let some 9% of intermediaries described landlords demand as strong or very strong, an increase of 3%, while 53% described demand as weak or very weak, the same as in the second quarter of 2017.
Remortgaging remained the 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 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, whilst an historic low of 33% of landlords remortgaged for the purpose of capital raising in the same period. This is the culmination of a long term trend and fewer landlords raising capital can be linked to the small decrease in overall remortgage cases in the third quarter of 2017.
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.’
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