Buy to let financing for landlords has increased to 57%, an all-time high, according to the latest financial advisor confidence tracking index (FACT) Index from Paragon
Meanwhile, mortgages for first time landlords accounted for just 10% of buy to let financing applications according to the data.
The latest survey, tracking developments for the third quarter of 2018, highlights a sharp increase in the proportion of landlords remortgaging, up from 49% in the second quarter.
In contrast, the proportion of first time landlord business fell from 14% to 10% and landlords looking for finance for portfolio expansion was down from 23% to 19% of the total.
Back in 2015 the proportion of landlords remortgaging first outstripped those seeking funds for portfolio expansion after the governement announcement of significant tax changes for landlords in that years Budget.
Since then, remortgaging has continued to rise almost inexorably and today six out of 10 intermediaries say the main reason that landlords are remortgaging is to secure a more favourable interest rate on the loan.
John Heron, the Managing Director of Mortgages at Paragon said ‘Landlords are investing less in the private rented sector which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford. This is clearly a response to the increase in costs that landlords face following changes to stamp duty and tax relief on finance costs,’ said John Heron, managing director of mortgages at Paragon.
‘It’s no surprise therefore to see that landlords are taking the opportunity to reduce their mortgage finance costs as one part of their strategy to mitigate the impact of higher taxation. Tax bills due in January 2019 will include the first phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead,’ he added.
Buy to let represented 19% of intermediary business in the third quarter, with the remainder taken up by mortgage applications from owner occupiers.