Remortgaging surge among UK landlords

According to the latest analysis from Paragon, a re-mortgaging surge among UK landlords is under way with intermediaries reporting that 52% of BTL mortgage cases during Q1 this year were for landlords seeking to re-mortgage.

The figure is up sharply from 29% in Q1 2015 prior to the Summer Budget in the same year when wide-ranging tax changes were announced, including the gradual removal of tax relief on buy-to-let mortgage interest.

Over the same time period, intermediaries say they have seen a drop in the proportion of mortgage applications from first time landlords, down from 19% to 13% of the total, as well as a fall in landlords re-mortgaging to raise funds in order to extend their portfolios. Re-mortgaging for portfolio expansion has fallen from 39% to 22%.

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Among those landlords looking to re-mortgage, the proportion seeking to secure a better interest rate reached the highest level ever in Q1 2018. Compared with three years ago when equal numbers of landlords were re-mortgaging for a better rate and to raise capital, in Q1 2018, 60% of landlords said securing a better interest rate was their primary objective. This compares with just 30% of landlords who said raising capital was their top priority. As a result, the gap between landlords looking for a better rate and those raising capital is now at the widest seen since 2013.

John Heron, Managing Director of Mortgages at Paragon said: “There’s a wide range of factors contributing to the surge in landlords re-mortgaging at the moment. These include the expiry of the initial term on mortgages taken out ahead of the stamp duty changes for second properties, the expectation of rate rises on the horizon and a desire to minimise interest costs in the face of new mortgage affordabilty rules. It will be interesting to see the extent to which mortgage applications for purchases and portfolio extensions increase once these factors have played out.”

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