The number of landlord remortgaging in the UK is close to record levels but fewer are doing so to increase their portfolios, new research shows.
The majority say that securing a better interest rate deal is more important than raising capital, according to the latest financial advisor remortgaging tracking index from Paragon.
Intermediaries reported that 52% of buy to let mortgage cases in the first quarter of 2018 were for landlords seeking to remortgage, up sharply from 29% in the first quarter of 2015 just before wide ranging tax changes were announced in the Budget, 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 remortgaging to raise funds in order to extend their portfolios.
Overall, remortgaging for portfolio expansion has fallen from 39% to 22% and among those landlords looking to remortgage, the proportion seeking to secure a better interest rate reached the highest level ever in the first three months of 2018.
Indeed, compared with three years ago when equal numbers of landlords were remortgaging for a better rate and to raise capital, in the first quarter of 2018 some 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 and the index report say that as a result, the gap between landlords looking for a better rate and those raising capital is now at the widest seen since 2013.
According to John Heron, managing director of mortgages at Paragon, there are a number of factors contributing to the surge in landlords remortgaging 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 affordability rules,’ he said.
‘It will be interesting to see the extent to which mortgage applications for purchases and portfolio extensions increase once these factors have played out,’ he added.
