Solid Q3 results for buy-to-let applications

The Paragon Mortgages quarterly FACT survey asks intermediaries for their views on the current state of the buy-to-let and wider mortgage markets, the availability of finance and how they think landlord demand is changing.

Intermediaries reported that, on average, 16.1 mortgages were introduced in Q3 - down from 16.7 in Q2. Remortgages were the most popular cases handled by intermediaries in Q3 (37%), followed by next-time buyers (25%), buy-to-let (19%) and first-time buyers (17%).

When asked what the most popular interest rates were across all mortgage applications in Q3, perhaps unsurprisingly fixed rates came out on top, accounting for 60% of all cases. More than a third (37%) were trackers and just 4% SVRs.

Despite the mortgage market continuing to recover intermediaries’ outlook is still cautious with those surveyed only expecting a 3.1% increase in mortgage business in the last quarter of 2012.

In terms of the availability of buy-to-let finance, 36% of intermediaries thought it had improved, 45% said it remained the same and 17% said their view was that availability had deteriorated in Q3. More than half (57%) said they expect availability to stay the same in the next 12 months.   

In terms of activity among landlords, they have been continuing on the property acquisition trail with 42% of cases handled by intermediaries relating to landlords’ looking to expand their portfolios. The second most popular reason for obtaining a buy-to-let mortgage were landlords’ who wanted to remortgage (28%) – remaining unchanged this quarter.

When asked for their views on landlord demand, 46% of intermediaries described demand as stable and 24% said they thought demand was strong – a small increase on Q2 (22%).

John Heron, Managing Director of Paragon Mortgages, said:

“Intermediaries have reported on an interesting quarter. Whilst business in some areas of the mortgage market such as buy-to-let, have been growing others are relatively stagnant and intermediaries appear cautious about the coming months.

“We are likely to continue to see buy-to-let cases increasing at a steady level but I suspect that cases handled by intermediaries for first-time buyers will remain limited.”