Over half of buy-to-let lending is landlords switching their deal
The proportion of landlords looking to remortgage is now at an all-time high, according to Paragon.
The lender said in the third quarter of 2018, there was a sharp increase in the proportion of landlords remortgaging, up from 49% in the second quarter to 57% of all buy-to-let business.
However, buy-to-let purchase business fell. The proportion of first-time landlord business fell from 14% to just 10% and landlords looking for finance for portfolio expansion was down from 23% to 19% of the total.
A growing trend
Remortgaging has been on the rise for landlords since 2015, and today six out of 10 mortgage advisers say the main reason that landlords are remortgaging is to secure a better interest rate.
John Heron, 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.
“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.”