Buy-to-let activity strengthens in Q4 – Paragon market report

This was up from 17.9% in Q3, although still not on a par with the 24.1% recorded in Q1 as landlords restructured their borrowing arrangements ahead of the Stamp Duty changes that were introduced in April 2016.

John Heron (pictured), managing director, Paragon Mortgages, said: “Buy to let had a very strong start to the year with customers looking to beat the Stamp Duty deadline. There was an inevitable decline in lending in Q2 but volumes have slowly improved as landlords have developed their strategies to mitigate higher taxes on rental income.”

The index also highlighted a strong end to the year for remortgage borrowing and found that in Q4 2016 it accounted for 39% of all mortgages handled by intermediaries. This was an increase of 7% on the figures reported in Q1.

The research also found that next-time buyers are now the second most common type of borrower, having overtaken buy-to-let lending, accounting for 23% of mortgages handled.

Heron added: “Our survey data shows increased levels of activity over 2016 driven particularly by borrowers remortgaging to better rates. These are as likely to be longer-term fixes as they are short -term deals which bodes well for customer resilience in an uncertain market.”

In terms of interest rate type, there was a clear preference among borrowers for fixed-rate mortgages, which accounted for 83% of all cases in Q4 2016 and has increased year-on-year since 2010. Tracker mortgages remain a distant second at 14% of all cases, representing little change over the course of 2016.

The Q4 2016 report was based on interviews with 201 mortgage intermediaries.