Buy to let mortgage activity to stabilise

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New research by Paragon has revealed that 65% of mortgage intermediaries expect the level of buy to let business to become stable during the next 12 months.

There has been a sharp decrease in buy to let lending since May 2016 when there were around 8,900 buy to let property purchases using commercial mortgages. In May 2018 this had dropped to 5,500. According to UK Finance figures, in June 2018, there was 19.4% fewer buy to let mortgages compared to June 2017. In the period May 2015 to May 2018, there has been a sharp increase in landlord remortgaging activity which has risen by 64% from 8,900 to 14,600. Many landlords remortgage to find lower interest rates.

The decline in lending activity is probably due to government changes that increased stamp duty and decreased mortgage interest tax relief for landlords. These extra costs have put some landlords off investing in new property.

Though there has been a decline in the buy to let market, the Paragon research shows that intermediaries who include commercial mortgage brokers are not pessimistic about the future. Buy to let borrowing may be at low levels compared to past years, but brokers are optimistic that there will not be a significant decrease in the number of commercial mortgage applications for buy to let property.

Remortgaging activity for borrowers wanting lower interest rates is expected to continue at a reasonably high level, especially if the Bank of England increases its interest rate again.

Buy to let mortgage activity to stabilise

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New research by Paragon has revealed that 65% of mortgage intermediaries expect the level of buy to let business to become stable during the next 12 months.

There has been a sharp decrease in buy to let lending since May 2016 when there were around 8,900 buy to let property purchases using commercial mortgages. In May 2018 this had dropped to 5,500. According to UK Finance figures, in June 2018, there was 19.4% fewer buy to let mortgages compared to June 2017. In the period May 2015 to May 2018, there has been a sharp increase in landlord remortgaging activity which has risen by 64% from 8,900 to 14,600. Many landlords remortgage to find lower interest rates.

The decline in lending activity is probably due to government changes that increased stamp duty and decreased mortgage interest tax relief for landlords. These extra costs have put some landlords off investing in new property.

Though there has been a decline in the buy to let market, the Paragon research shows that intermediaries who include commercial mortgage brokers are not pessimistic about the future. Buy to let borrowing may be at low levels compared to past years, but brokers are optimistic that there will not be a significant decrease in the number of commercial mortgage applications for buy to let property.

Remortgaging activity for borrowers wanting lower interest rates is expected to continue at a reasonably high level, especially if the Bank of England increases its interest rate again.

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