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IFA confidence soars as business booms

Confidence among mortgage IFAs soared to a new peak during the last quarter as the number

of mortgages arranged rose to a new high, reveals the latest Paragon Mortgages Financial

Adviser Confidence Tracking (FACT) Index issued today.

Paragon&#39s quarterly index stood at 135.5 at the end of June. Rising from 121.7 for the first

quarter of the year, this is the biggest single quarter-on-quarter increase since the Index was

launched nearly eight years ago.

The rise is entirely accounted for by the rise in actual business levels, which were up 15%

over the previous quarter, 21% higher than a year ago and 23% higher than two years ago.

Overall, remortgaging accounted for 42% of all mortgage business. The proportion of

remortgages arranged for short-term gain fell to the lowest level ever, at 3.2% – less than a

fifth of the amount remortgaged for short-term gain four years ago.

Today the prime reason for remortgaging is to reduce or control outgoings, up from 22% to

25%. A further quarter is for home improvements and 18% to finance second properties.

At 10%, the volume of buy-to-let mortgages fell slightly from 11% last quarter. Of these

mortgage, just over four out of ten, 42%, were investors making their first buy-to-let

acquisition. Over a third of all buy-to-let mortgages involved investors extending property

portfolios. 16% of the buy-to-let business was re-mortgaging and 6% was for property

substitution.

John Heron, managing director of Paragon Mortgages, says: “This proportion of buy-to-let

mortgage activity is well balanced. At a tenth of the overall mortgage market, it reflects

precisely the proportion of the private rented sector to the housing market as a whole.”

The Paragon index also showed base rate tracker mortgages continuing to grow in popularity.

They increased market share from 26% to 30%. The rise was mainly at the expense of fixed

rate mortgages, which fell from 26% to 23%.

“This suggests that borrowers believe the low interest rate economy is here to stay but

probably they have already factored in the likelihood of base rate rises of 1% or 2% when they

commit to a

mortgage,” says Heron.

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