Paragon Mortgages’ Financial Adviser Confidence Tracker (FACT) Index, a panel-based survey of mortgage brokers, found that 30% of landlords obtained a buy-to-let mortgage via a financial adviser for remortgage purposes in the final quarter of 2009, down from 39% in the third quarter. This is the fourth quarterly decrease and the lowest proportion since the third quarter of 2006.
In the current economic environment, there is little incentive for landlords to remortgage as the low Bank of England base rate means it is normally financially beneficial for landlords to remain on their mortgage reversionary rates. In addition, there continues to be a lack of mortgage products to enable landlords to remortgage.
John Heron, Paragon Mortgages’ managing director, said: “Buy-to-let remortgaging activity continues to decline and we can see it only going one way until competition starts to increase. At the moment, in the majority of cases the landlord’s reversion rate is typically better than anything they can secure in the mortgage market, so there is little incentive to switch.”
In contrast, the proportion of landlords obtaining buy-to-let mortgages for portfolio extension purposes hit fresh highs in the final quarter of the year. According to FACT, 52% of landlords obtained a mortgage to extend their portfolio in the final quarter of 2009, up from 48% in the third.
The proportion of first-time landlord business via financial advisers surveyed ticked-up during the quarter, from 10% in the third quarter to 16% in the fourth, whilst 2% of business was for property substitution purposes.