Paragon: BTL brokers will switch focus to 5-year remortgage deals

Jake Carter

January 7, 2021

Buy-to-let mortgage brokers will switch their focus to 5-year remortgage deals once the stamp duty holiday ends, according to research from Paragon Bank.

Half of brokers that deal in BTL said that they would focus on 5-year remortgage business once the tax holiday concludes.

The data outlines that the number of 5-year fixed BTL deals completed in the six months to the end of March 2016 was up 121% annually.

In addition, the introduction of new BTL underwriting rules in 2017 provided further stimulus to the 5-year fixed market.

Other areas of focus identified by brokers included concentrating on clients’ needs for short-term finance and diversifying into holiday lets, selected by 16% and 13% of brokers respectively.

Meanwhile, four in 10 brokers said they had no plans to cope with a decline in business once the stamp duty holiday ends.

The study of 200 intermediaries found that six in 10 think that case volumes will be negatively affected after the tax break ends.

The majority of brokers (47%) expect business to ‘significantly decrease’, with ‘slightly decrease’ the outlook for 12% of respondents.

Conversely, just over one in 10 expect case volumes to actually increase in quarter two of 2021, 9% think slightly and 2% significantly.

Moray Hulme, director for mortgage sales at Paragon, said: “There was a significant increase in 5-year fixed rate business written in the run-up to the introduction of a 3% BTL stamp duty surcharge in April 2016 and those deals are due to expire in the coming months.

“Brokers are extremely busy getting deals over the line ahead of the end of the stamp duty holiday, but the prospect of remortgage business will give them some hope that they won’t face a complete cliff edge of business as we head into April.

“The stamp duty break has provided welcome stimulus to business and has helped the buy-to-let market bounce back.

“Once the scheme ends we expect the landscape to be quite different when compared to the one we have seen over the past few months, with many expecting cases to reduce significantly.

“While we recognise that this does result in some uncertainty for the industry, we should be reassured when we remember how mortgage application numbers recovered after taking a dip in 2016 when new rules meant landlords were required to pay an additional 3% stamp duty on property purchased to rent over and above standard rates.”

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