Brokers see more demand for specialist mortgages but less buy to let forecast
Demand for specialist mortgages, particularly from self-employed people, increased in the UK in the first quarter of 2017, but buy to let demand is forecast to fall, the latest data shows.
Applications from self-employed people increased by 24% and from those with complex incomes there was a rise of 17%, according to the index report from Paragon Mortgages which tracks 200 mortgage intermediaries.
The report says that there is a growing requirement for specialist mortgage products and wider availability of products that meet the demands of underserved segments of the mortgage market.
Other customer types were largely unchanged in the first quarter of 2017 with high loan to value lending at 15%, interest only at 13%, lending into retirement 11%, low income 9%, and adverse credit 7%.
The average number of mortgages introduced per intermediary office was 20, down from 21 in the previous quarter and the third successive fall. Despite this more recent decline, the number of mortgages introduced has held between 20 to 25 for almost four years, maintaining a slow recovery tracked from 2009 when the number reached a record low of 14.
The report also revealed a positive forecast from intermediaries, with the expected change in overall business over the next three months up for the first time since the first quarter of 2015, reversing consecutive reductions in each of the previous seven quarters.
Meanwhile, mortgage advisors expect to do 2% less buy to let mortgage business in the coming year. This, however, is an increase on the previous quarter and, following the largest ever decline seen in the first three months of 2016, the average now appears to be on a modest upward trend.
Asked about the importance of the Prudential Regulation Authority’s (PRA) new affordability rules in estimating the expected change in their level of buy to let mortgage business in the next 12 months, some 85% of advisors said that the changes had been at least quite important, up from 80% in the previous quarter, whilst just 10% said they were not important.
‘It’s encouraging to see increased demand and greater availability of specialist mortgages. Customers with complex incomes deserve access to a wider choice of mortgage products and to specialist underwriting that recognises their unique circumstances,’ said John Heron, managing director of Paragon Mortgages.