RLA News Service

The number of residential landlords who remortgage their buy-to-let loans continues to decrease, according to figures released by Paragon Mortgages. The last fiscal quarter of 2009 saw yet another drop in remortgages and fewer still are obtaining loans through financial advisors. In fact, 30 percent of residential landlords were able to receive a loan by applying through a financial advisor in order to remortgage their existing properties. This represents a 9 percent drop over figures from just three months earlier, last fall, considering that the proportion of remortgages arranged through a financial advisor stood at 39 percent. Paragon Mortgages has tracked continuous decline in remortgaging for the past four quarters and the firm concluded that the number of landlords choosing this financial arrangement has never been this low since 2006.

Landlords often choose not to remortgage because the Bank of England’s base rates continue to hover near historic lows of 0.5 percent and it is challenging to secure a better rate from lenders than what investors in the buy-to-let sector may already have. The relatively restrictive nature of buy-to-let lending and a scarcity of loan products for the rental sector have also discourage landlords who might consider remortgaging.

Britain’s Council of Mortgage Lenders seems to underscore what Paragon found in its survey. Over the past two years, gross advances in the buy-to-let loan sector have decreased by a staggering 72%. While the value of regular mortgages has also fallen, the decline has been closer to 50%.