As a result of the regulatory developments driven by MCD, many let-to-buy mortgages will be regulated because they are captured under the regulatory definition for Consumer Buy-to-Let.
This will include loans where a customer has no other rental properties, and is looking to remortgage a property they have previously lived in – commonly known as ‘let-to-buy’.
Paragon's data found that, in Q4 2015, 12% of mortgage cases were let-to-buy, up from 10.6% in Q3 2015.
Additionally, while let-to-buy accounts for less than 5% of business for the majority of brokers, for 10%, let-to-buy accounted for more than 30% of business in Q4 2015.
Despite this trend however, 60% of respondents thought the implementation of the MCD in March would have no impact on levels of let-to-buy business, while a quarter thought it would lead to less, as compared to 11% who said it would lead to more.
John Heron, Director of Mortgages, said:
“Despite financial advisers expressing some scepticism about what impact the MCD will have on let-to-buy business volumes, we have seen a clear uptick in the volume of let-to-buy mortgages being written in Q4 2015."
