In 2016, the Council of Mortgage Lenders recorded £40bn of gross buy-to-let mortgage lending; £14.9bn for house purchases and £25.1bn for remortgaging.
Jeremy Duncombe, director, L&G Mortgage Club, said the company’s prediction is based on a slowdown in buy-to-let purchases and a shift toward more remortgaging. “Our prediction of around £35bn of buy-to-let lending this year is not an indication that L&G thinks the market is struggling, it is more a reflection of how the market is adapting to the tax changes and changes shape to evolve.”
Purchase business has already dropped off significantly, said Duncombe, with remortgaging accounting for the majority of business being written. “Intermediaries should not be concerned about a slowdown in lending. There is still strong of demand for buy to let and with 90% of that business coming through the broker channel, there remains plenty of opportunities.”
Andrew Montlake, director, Coreco, commenting on BM Solutions research on buy-to-let yields said remortgaging existing portfolios was a common strategy adopted by London landlords to release equity for future purchases as rental calculations meant securing a mortgage about 65% loan-to-value was difficult.
In December, the Council of Mortgage Lenders downgraded its overall prediction for mortgage lending for 2017 from £261bn to £248bn. Overall lending in 2016 was £246bn.