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There has been a remortgaging surge from UK buy to let investors, with intermediaries reporting that 52 per cent of buy to let mortgages in the first quarter of 2018 came from investors looking to remortgage.
The figures reported for Q1 mark a sharp rise from the 29 per cent recorded in the first quarter of 2015 before the Summer Budget of that year. During the Budget, tax changes were announced including the gradual removal of tax relief on buy to let mortgage interest.
Intermediaries have also seen a drop in the proportion of mortgage applications from first time landlords, down from 19 per cent to 13 per cent. There has also been a fall in landlords remortgaging to raise funds to extend their portfolios. Remortgaging for portfolio expansion has dropped from 39 per cent to 22 per cent.
Of those looking to remortgage, the proportion aiming to secure a better interest rate reached the highest level ever in Q1 2018. This is in sharp contrast to three years ago when equal numbers of landlords were remortgaging for a better rate and to raise capital. In the first quarter of 2018, 60 per cent of landlords stated that securing a better interest rate was their main agenda. This is in comparison to the 30 per cent of landlords who said that raising capital was their main priority. The gap between landlords looking for a better rate and those raising capital is at its widest since 2013.
Managing Director of Mortgages at Paragon, John Heron, said: ‘There’s a wide range of factors contributing to the surge in landlords remortgaging at the moment. These include the expiry of the initial term on mortgages taken out ahead of the stamp duty changes for second properties, the expectation of rate rises on the horizon and a desire to minimise interest costs in the face of new mortgage affordabilty rules. It will be interesting to see the extent to which mortgage applications for purchases and portfolio extensions increase once these factors have played out.’