"It’s great to see the proportion of lending for portfolio extension purposes increase and hit its highest level for nearly three years."
Mortgage brokers predict that strong remortgage levels and portfolio expansions will spark an increase in buy-to-let mortgage business over the next 12 months.
Paragon’s research found that one in five brokers expects to introduce more buy-to-let business in 2020, compared to 11% who say it will fall. Overall, brokers expect to do 0.8% more business this year, the second quarterly increase in a row.
Paragon's data shows that the proportion of landlords obtaining buy-to-let finance for portfolio extension rose to its highest level since Q1 2017 during the final quarter of 2019. Nearly one in four (24.5%) buy-to-let mortgages were written for portfolio extension, whilst 50% was for remortgaging purposes, a fall from 55% the previous quarter.
Of buy-to-let landlords remortgaging during the final quarter, the overwhelming majority (61%) were doing so to secure a better rate of interest, with nearly a third (31%) remortgaging to raise capital.
Overall, brokers said that buy-to-let accounted for 17.7% of overall business during Q4 2019, the highest proportion for a year.
Richard Rowntree, managing director of mortgages at Paragon, said: “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.”