2016 has seen a shift towards remortgaging in investor mortgage behaviour, with Paragon Mortgages’ latest Financial Advisors Confidence Tracking (FACT) Index observing a growth in the remortgaging business with each quarter.
The report for Q4 of 2016 was based around interview with 201 intermediaries. It found that 39 per cent of all mortgages handled by advisers between October and December were remortgages, up 7 per cent on the first quarter, and a 4 per cent rise year on year.
The second most common type of borrower were ‘next time investors’ at 23 per cent. Buy to let investment took a slight knock in the mortgage department, following April’s rise in Stamp Duty, however it increased again by Q4 to a sizeable 19.3 per cent of all recorded business. First time buyer figures remained stable, at 18 per cent of all mortgages handled.
Borrowers across the board showed clear preference towards fixed rate mortgages, which accounted for 83 per cent of all products purchased in Q4 2016, increasing yearly since 2010. Tracker mortgages trailed far behind at just 14 per cent, showing little increase over the year.
Initial fixed or tracker periods of two years remained the popular products, accounting for 53 per cent of all cases in Q4 2016m up 5 per cent annually. Products of more than two years accounted for 46 per cent of all cases in Q4 2016, whilst five year products consumed 33 per cent.
Capital repayment mortgages accounted for 80 per cent of products sold in Q4 2016, making it the most popular product type. 2009’s stricter affordability rules have seen the proportion of interest only mortgages decline to 14 per cent and has since remained steady.
Managing Director at Paragon Mortgages, John Heron, said: ‘Our survey data shows increased levels of activity over 2016 driven particularly by borrowers remortgaging to better rates. These are as likely to be longer term fixes as they are short term deals which bodes well for customer resilience in an uncertain market. Buy-to-let had a very strong start to the year with customers looking to beat the stamp duty deadline. There was an inevitable decline in lending in Q2 but volumes have slowly improved as landlords have developed their strategies to mitigate higher taxes on rental income.’