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Buy to let remortgaging at lowest level for 2 years

Buy to let remortgaging at lowest level for 2 years

27 November 2009 / by Rachael Stiles

Buy to let remortgaging has fallen to its lowest level for more than two years, according to the Paragon Mortgages' Financial Advisor Confidence Tracker Index.

The panel-based survey of mortgage brokers found that landlords are increasingly deciding to stick with their existing buy to let mortgage deal, with just 39 per cent of landlords obtaining a remortgage in the third quarter of 2009.

This marks the lowest number of landlords refinancing their investment properties since the first quarter of 2007, the statistics show.

In the meantime, the proportion of landlords obtaining buy to let mortgages for portfolio expansion is the highest since Paragon's records began in 2001.

The 48 per cent of landlords who took out a mortgage to extend their property portfolio marks a significant recovery from the final quarter of 2008, when just 31 per cent of landlords were taking out buy to let mortgages for this purpose.

But it is mostly experienced landlords who are leading the recovery in the buy to let mortgage sector, as first-time landlords only accounted for 10 per cent of business, the lowest level on record, falling from 42 per cent in the fourth quarter of 2001.

John Heron, managing director of Paragon Mortgages, explained why landlords are not remortgaging at the moment: "they can't because of the low number of mortgages available and there is little incentive to do so because the reversion rates when coming off an introductory deal are so attractive due to the low Bank of England Base Rate and Libor."

He added that Paragon does not expect this to change in the foreseeable future while landlords are happy to remain with their existing lender.

"It is encouraging that landlords are now adding to their portfolios," Mr Heron continued, taking advantage of depreciated house prices before they start to rise again.

But, despite the promising figures, it is too early to say that the sector has recovered, because investors are still suffering from a "severe lack of competition in the mortgage market."

© Fair Investment Company Ltd