Optimism in the buy-to-let mortgage business is high, but the remortgage market is showing signs of slowing down. What does this mean for your business? Read on to discover more. It may surprise you. Portfolio landlords have diverse mortgage requirements based on property type, age range, tax bracket, and limited company status.
That is why some lenders have decided to stay out of the portfolio landlord space, preferring to focus on more vanilla customers. Professional property investors use specialist buy to let mortgage providers. Specialists buy to let lenders may require more information and may take longer to decide.
Optimism in the buy-to-let mortgage business
The demand for buy-to-let mortgages remains strong, although the industry is still far from booming. However, there are signs of optimism. Freddie Mac, an OTCQB-listed mortgage lender, has released new research on the rise of renters. This survey of 7,000 UK renters showed that 47% of landlords are looking to extend their portfolios. In addition, a quarter of landlords are buying their first buy-to-let property.
The recent survey by Paragon Mortgages of 195 intermediaries suggests that the buy-to-let mortgage market is improving. Half of these intermediaries expect to write more buy-to-let best mortgage lender Whitefish this year. This is down from the previous year when three-quarters of intermediaries felt that the market was weak. This suggests that landlords and mortgage brokers are largely optimistic about the market’s future.
Impact of Covid-19
The ban on evicting tenants from buy-to-let properties is set to end in March 2021. This will mean that landlords who have let out property will be able to reclaim the property in full – even if they are having problems paying rent. This will increase rental stock, meaning that prices will fall. It will also mean that landlords must start fresh claims, which will take six months to process.
Despite the impact of the ban, landlords are largely optimistic about the future of the industry. According to the Foundation Home Loans survey, 64 percent of landlords are confident that their businesses will remain untouched by Covid, and the proportion of landlords expecting hardship has dropped from 11 to nine percent. This is particularly true of landlords with 20 or more properties. However, landlords should remember that this crisis has impacted all sectors of the economy.
Impact of the remortgage market
The buy-to-let mortgage business has remained buoyant over the past two years despite the remortgage market. This sector continues to benefit from the current favorable lending environment, with demand from portfolio landlords continuing to be strong. Furthermore, the buoyant remortgage market is still seen as a good opportunity for buy-to-let mortgage providers. In addition to providing mortgages to property investors, remortgaging also creates new opportunities.
Recent government initiatives have had a profound impact on the buy-to-let mortgage market. In July 2015, the Government announced changes to the mortgage interest relief and Stamp Duty Land Tax, which will further affect the market. Further, the UK government announced changes to reduce loan-to-value ratios and implement affordability tests. These changes will also result in tapering of tax reliefs for landlords, which could prove costly to high-net-worth individuals.
Impact of remortgage market slowdown on buy-to-let mortgage business
Lenders are increasingly focusing on remortgaging properties as interest rates are low. The March stampede to buy-to-let mortgages had a detrimental impact on housing transactions. However, the remortgage market is expected to recover once the Stamp Duty Holiday ends in 2021. The following section of the report looks at how the slowdown in the remortgage market is affecting the buy-to-let mortgage market.
Although the buy-to-let mortgage market is still growing, the remortgage market has slowed down. While this may discourage landlords, the remortgage market remains a healthy part of the UK housing market. Though the government’s legislative reforms may have put more pressure on landlords, the buy-to-let market is still an incredibly sensible investment opportunity.