Buy-to-Let Mortgage Activity Expected to Rise in 2020

Author: Rent Guarantor

11/02/2020

As more new data highlights a pickup in the UK's housing market, a survey suggests that buy-to-let (BTL) mortgage activity is set to gain ground in 2020, with more property investors looking to expand their portfolios. Remortgaging activity is also expected to remain robust, however it appears this renewed appetite to purchase more BTL homes is driving overall positive expectations.

Data from Paragon’s latest FACT research shows in the final quarter of 2019, almost one-quarter of BTL mortgages were written for borrowers who were increasing their portfolio. That’s the highest proportion since the first three months of 2017, a development which is helping create a positive outlook among the UK’s mortgage brokers.

BTL mortgage confidence rising among brokers

Other details from Paragon’s survey show that 20% of brokers said they expect to see a rise in their BLT mortgage business in 2020.That compares with 11% who say they expect that portion of their business to decline over the course of the year.

The averaged figures suggest that overall, mortgage brokers expect to do 0.8% more BTL business in 2020, the second quarter this measure has risen.

Meanwhile, while 24.54% of broker’s BTL mortgages were for new purchases to grow property investors’ portfolios, the proportion of BTL remortgages edged back. In the fourth quarter of 2019, Paragon’s survey shows that 50% of BTL mortgages were remortgages, down from 55% in the third quarter.

In addition, brokers said that BTL business accounted for 17.7% of their overall mortgage activity in the 2019 Q4, the highest proportion since Q4 2018.

“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,” said Richard Rowntree, Managing Director of Mortgages at Paragon.

“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,” he added.

Lenders hope to benefit from increased BTL mortgage demand

As Paragon’s research highlights positivity in the BTL mortgage market, following a 200% in its own lending volumes in 2019, specialist BTL lender Landbay recently launched a new, limited edition mortgage product. The competitive product, which can be used for properties worth up to £400,000, specifically for landlords who are seeking to grow their portfolio for the UK’s important private rental sector (PRS).

“We’re delighted to launch a product which will directly meet the needs of landlords, and in turn support their brokers working in the private rental sector,” Paul Brett, managing director of Intermediaries at Landbay.

“This is just the start of a suite of offerings we expect to make in 2020, allowing us significantly grow our lending operation in the year ahead,” he added.