The number of landlords looking to remortgage has now reached an all-time high, according to a survey by Paragon.
Its Financial Adviser Confidence Tracking (FACT) Index surveyed approximately 200 mortgage intermediaries on the development of the UK mortgage market each quarter since 1995.
The latest survey, which tracked developments for Q3 2018, highlights a sharp increase in the proportion of landlords remortgaging, up from 49% in the second quarter to 59% of all buy-to-let business.
In contrast, the proportion of first-time landlord business fell from 14% to 10%, while landlords looking for finance to expand a portfolio was down from 23% to 19%.
What’s more, the proportion of landlords remortgaging first outstripped those seeking funds for portfolio expansion back in 2015 following the announcement of significant buy-to-let tax changes in the Summer Budget.
Remortgaging has continued to rise since then, with landlords doing so to secure a better interest rate, according to six out of ten survey participants.
In total, buy-to-let represented 19% of intermediary business in Q3 2018, with the remainder taken up by mortgage applications from owner-occupiers.
“Landlords are investing less in the private rented sector which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford,” said John Heron, managing director of mortgages at Paragon.
“This is clearly a response to the increase in costs that landlords face following changes to stamp duty and tax relief on finance costs.”
He said it’s no surprise that landlords are taking the opportunity to reduce their mortgage finance costs as a strategy to mitigate the impact of higher taxation.
“Tax bills due in January 2019 will include the first phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead,” he added.