Broker buy-to-let business hits 3-year high

Research by buy-to-let mortgage specialist Paragon Mortgages showed that buy-to-let accounted for over one in five mortgages (21%) introduced by brokers during the three months to 31 December 2010.

This was up from 17% during the third quarter and accounts for the highest proportion of broker business since the third quarter of 2007.  

Conversely, the proportion of intermediaries' business made up of residential loans dropped to its lowest level since the second quarter of 2009. Residential mortgages accounted for 71% of broker business during the quarter, down from 76% the previous quarter.

Paragon's Financial Adviser Confidence Tracking Index (FACT), a panel-based survey of mortgage brokers, showed that of the buy-to-let business handled during the period, 45% was for experienced landlords expanding their portfolios and 34% was for remortgaging purposes.

First-time landlords accounted for 18% of buy-to-let activity - the highest proportion since the first quarter of 2010 - with property substitution accounting for 3% of business.

John Heron, Paragon Mortgages' Managing Director, says:

"Buy-to-let is clearly an important source of business for the broker community and, given the growth in tenant demand and expected expansion of the private rented sector, it can play an even greater role going forward.

"It is forecast that nearly one in five households will live in privately rented accommodation by 2015, up from the current one in seven, and the sector will obviously require buy-to-let finance to facilitate that growth.

"The broker community is well placed to help landlords meet their finance needs; buy-to-let is a commercial product and landlords appreciate the advice and support offered by the intermediary sector.

"The good news is that competition and innovation is slowly but surely returning to the buy-to-let market and that is likely to continue throughout 2011."