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Buy-to-let 2022 predictions: Remortgaging to rise

Christina Hoghton
Written By:
Christina Hoghton
Posted:
Updated:
01/01/2022

A swathe of landlords have mortgage deals up for renewal this year, plus the green sector will grow further

Remortgage activity from landlords will be strong in 2022, according to Paragon Bank.

The specialist lender said that a wave of five-year fixed rates are set to mature throughout the next year. And it’s putting plans in place now to ensure it’s well equipped to manage the surge.

This year’s predicted remortgage boost is because of a steep increase in borrowers opting to fix their mortgage rates over longer terms of five years back in 2017. They did this because of lending rules introduced at the time by the Prudential Regulation Authority (PRA).

There was a sharp rise in five-year fixed rates taken between December 2016 and January 2017. This figure then increased to 10,717 over the following year to January 2018.

Moray Hulme, Paragon Bank mortgage sales director, explained: “Five years ago, the PRA introduced new underwriting standards that required lenders to take a more holistic approach to assessing mortgage affordability.

“This correlates with 2017 seeing a significant increase in the volume of mortgages fixed over five years. As a result, we’re anticipating strong levels of remortgage business throughout the next year.”

Three other trends Paragon expects to influence the buy-to-let mortgage market in 2022 include:

1. Tenant demand to remain robust

Since the start of the pandemic, around a third of employees have started to work remotely to some degree. The threat of the Omicron variant has led the Government to request that everyone who is able, to do the same and this is likely to lead to further reassessment of what is important about our homes, maintaining the strong tenant demand we’ve experienced throughout 2021.

2. Continued pressure on property supply

This demand will sustain the pressure on supply which Paragon argues has been accelerated by the pandemic, not caused by it. It is likely that the Government will face mounting calls to balance policy between protecting tenants while removing fiscal and regulatory barriers to private investment in the UK’s second largest tenure.

3. Growth of green offerings

With the deadline for the Government’s proposed changes to energy-efficency requirements looming, the next year will see lenders increase their offerings that support the buying of more energy efficient homes. With a substantial proportion of the sector’s stock requiring costly upgrades to meet any new standards, lenders will also look to find new ways to support landlords with environmentally focused finance products.