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The number of landlords re-mortgaging their properties in the first three months of this year has increased in the first quarter of 2018. Data compiled by Paragon, a leading buy to let mortgage provider, shows that 52% of mortgage applications were from landlords looking for refinancing deals on their portfolios. This is a sharp increase on the 29% of re-mortgage finance applications during the same quarter in 2015. At the same time, mortgage applications from first-time buyers fell 6%.
Locking In Low Rates
Experts say the increase in mortgage applications is because landlords are trying to lock in low interest rate deals before the Bank of England raises the base rate and mortgage rates rise in tandem. 60% of mortgage applications were from landlords looking for a better deal, whereas the number of landlords applying for mortgage funding to finance property purchases fell.
Three years ago, the government announced sweeping changes to the buy to let sector, which included the gradual loss of mortgage interest tax relief. This has had a significant effect on the private rental sector, particularly on the numbers of first-time landlords investing in buy to let properties.
Interest Rate Hikes on the Horizon
Now, with interest rates on the horizon, many landlords are seeking to minimise their costs while first-time landlords are thinking twice about investing in buy to let property. Current data suggests that the Bank of England will raise interest rates later this year, probably to 0.75%. However, this will depend on how the economy responds to Brexit.
