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Growth in Buy-to-Let Mortgage Applications Predicted for 2020

Written on .

Posted in Buy To Let News, News.

Paragon Bank, one of the leading mortgage lenders in the UK, is predicting an increase in buy-to-let mortgage applications during 2020.

Their recently-published FACT research reports on the general performance of the UK’s mortgage market as well as developing trends.

Buy-to-let Landlords

It is expected that the increase won’t only come from new landlords applying for mortgages for their first buy-to-let property. In Q4 2019, almost a quarter of all buy-to-let mortgages were for existing landlords looking to increase their portfolios. This is the highest level since Q1 2017, suggesting that now is the perfect time to invest in additional property.

Paragon Bank has stated that recent tax changes are making landlords find more efficient ways to run their business. This in turn has created greater demand for mortgage products for incorporated and limited liability partnerships.

Additional research by BVA BDRC shows that the number of landlords planning on purchasing a property as a limited company has almost doubled in less than two years.

The recently published FACT report from Q3 2019 states that the amount of buy-to-let business carried out by mortgage brokers is expected to increase by more than 1% during 2020. This is the highest figure since Q3 2018 and 2% higher than Q2 2019.

Buy-to-let Mortgages

The research also found that fixed rate mortgages are the most popular kind of mortgages. Chosen by 89% of applicants are these mortgage types. Whereas only taken up by 9% are tracker rate mortgages.

Mortgages with a fixed rate period of five years or more have also become more popular. Over the past five years they have grown from 30% to 46% of all new mortgages.

Also published in the report was insight about the most popular mortgage applicants with specialist requirements. In Q3 2019 this was the self-employed, with 22% of the take-up. This is a growth of 2% on Q2 2019 and a continuation of the long-term trend.

Managing Director of mortgages of Paragon, Richard Rowntree, says, “buy-to-let lending has been driven by remortgage business in recent years. So it’s great to see the proportion of lending for portfolio extension purposes increase and hit its highest level for nearly three years.

“It’s also encouraging to see that the balance of brokers expecting to write more buy-to-let business is positive for 2020 as confidence has been subdued for much of the past four years. These are green shoots and we hope that they will continue throughout this year on the back of a more certain regulatory, economic and political environment.”

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