View more on these topics

Lower remortgage activity predicted for buy-to-let: Paragon

Landlords taking action to mitigate higher tax costs will lead to a lower level of buy-to-let remortgage transactions, according Paragon’s PRS Trends Report for Q1 2019.

The lender’s quarterly survey, which tracks the experience of more than 200 landlords, shows that while landlords remain engaged in the sector, they are now prioritising measures to bolster financial strength over portfolio expansion.

The survey shows how landlords have scaled back their buying intentions, reduced their reliance on mortgage debt and improved affordability by spending less of their rental income on mortgage payments.

For example, the proportion of landlords looking to purchase property has fallen from between 15 and 20 per cent before the announcement of tax and regulatory changes in 2015 to just 7 to 10 per cent today.

Average portfolio gearing – which measures the proportion of debt finance relative to a portfolio’s overall value – has fallen from 40 per cent in 2014 to 33 per cent today. Landlords who have three or more properties borrow 36 per cent of their portfolio value on average.

Meanwhile mortgage costs as a proportion of rental income are down from 30 per cent at the beginning of 2017 to 27 per cent, also aided by landlords remortgaging onto lower interest rate and longer-term fixed mortgage deals.

Paragon director of mortgages John Heron (pictured) says: “The shift in focus from portfolio expansion to financial strength has driven a surge in BTL remortgaging, with lower interest rates and longer initial fixed periods helping landlords reduce finance costs and lock in greater certainty.

“However, it also extends the product maturity cycle, guaranteeing a reduction in the scale of opportunity to refinance BTL mortgage deals over the next few years.”



What exactly is a missold mortgage?

There are many breaches that constitute a missold mortgage but the fundamental question is whether people were treated fairly by their adviser or lender. I am looking at complaints that a recommendation was inappropriate for debt consolidation, capital raising, extending the term, affordability, arrears and right-to-buy mortgages. There are many breaches that constitute a missold […]


Interest rates predicted to rise in early 2020s

On 2 August 2018, the Bank Of England raised interest rates from 0.5 per cent to 0.75 per cent. The previous base rate rise was in November 2017, from 0.25 per cent to 0.5 per cent, which was the first raise for more than a decade. Mark Carney, governor of the Bank of England, said in August […]

A bull case for US equities?

Neptune video: a bull case for US equities?

Watch Felix Wintle, head of US equities at Neptune, discuss why he believes US equities are in a structural bull market and the key factors that can drive the S&P 500 higher.

In the video, Wintle addresses the following:

• The US market and why — despite equities rising from 2009 — he believes the structural bull market only started in 2013
• Key economic and corporate factors that can drive the S&P 500 higher
• Investment themes and sectors offering exposure to the domestic recovery


News and expert analysis straight to your inbox

Sign up