Paragon Banking : Buy-to-let brokers to turn attention to five-year remortgage business
January 07, 2021 at 06:42 pm IST
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Buy-to-let brokers to turn attention to five-year remortgage business
BUY-TO-LET-MORTGAGES
Thursday, 07/01/2021
Buy-to-let mortgage brokers will switch their attention to the remortgage of five-year deals written in 2016 after the Stamp Duty holiday ends at the end of March, Paragon Bank research has found. Half of brokers that deal in buy-to-let (50%) said that they will focus on five-year remortgage business when the Stamp Duty holiday ends. The number of five-year fixed rate buy-to-let mortgages increased significantly in the run-up to the introduction of the buy-to-let Stamp Duty surcharge in April 2016. Industry data shows that the number of five-year fixed buy-to-let completed in the six months to the end of March 2016 was 121% higher than the same period in 2015. The introduction of new buy-to-let underwriting rules in 2017 provided further stimulus to the five-year fixed market, with this length of deal continuing to grow in popularity since. Moray Hulme, Paragon Director for Mortgage Sales, said: 'There was a significant increase in five-year fixed rate business written in the run-up to the introduction of a 3% buy-to-let Stamp Duty surcharge in April 2016 and those deals are due to expire in the coming months. 'Brokers are extremely busy getting deals over the line ahead of the end of the Stamp Duty holiday, but the prospect of remortgage business will give them some hope that they won't face a complete cliff edge of business as we head into April.' Other areas of focus identified by brokers included concentrating on clients' needs for short-term finance and diversifying into holiday lets, selected by 16% and 13% of brokers respectively. Meanwhile, four in 10 brokers said they had no plans to cope with a decline in business once the Stamp Duty holiday ends. Paragon's survey of over 200 intermediaries found that nearly six in ten think that case volumes will be negatively affected after the Stamp Duty break ends. The majority of brokers, 47%, opted for the most negative forecast, expecting business to 'significantly decrease', with 'slightly decrease' the outlook for 12% of respondents, making it the next most popular choice. Conversely, just over one in ten expect case volumes to actually increase in quarter two of 2021, 9% think slightly and 2% significantly. Moray Hulme added: 'The Stamp Duty break has provided welcome stimulus to business and has helped the buy-to-let market bounce back. Once the scheme ends we expect the landscape to be quite different when compared to the one we have seen over the past few months, with many expecting cases to reduce significantly. 'While we recognise that this does result in some uncertainty for the industry, we should be reassured when we remember how mortgage application numbers recovered after taking a dip in 2016 when new rules meant landlords were required to pay an additional 3% Stamp Duty on property purchased to rent over and above standard rates.'
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Paragon Banking Group plc published this content on 07 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 January 2021 13:11:03 UTC
Paragon Banking Group PLC is a United Kingdom-based specialist bank. The Companyâs lending products include mortgages for landlords and loans for business customers. Its lending is funded by deposits from savings customers, together with wholesale funding. It helps individuals and small businesses across the United Kingdom prosper and is focused on customers in markets typically underserved by large high street banks. The Company operates through two segments: Mortgage Lending and Commercial Lending. It offers buy-to-let mortgage finance for landlords operating in the United Kingdomâs Private Rented Sector. It provides finance to small and medium-sized enterprises (SMEs), and small corporates operating in a range of commercial lending markets, as well as motor finance to United Kingdom-based consumers. The Company is focused on specialist assets and underserved markets in four main areas: SME lending, development finance, structured lending and motor finance.