Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Half of brokers confident of BTL rebound

brokers

The increasing confidence shows that the market is recovering following the impact of the coronavirus crisis

Half of mortgage intermediaries expect to write more buy-to-let business in the next 12 months, according to a new survey by Paragon Bank.

When asked to describe demand for buy-to-let mortgages at present, 48% of brokers indicated that it is ‘strong’ or ‘very strong’. This is up from 26% in June 2020 and a huge increase when compared to the same time last year, when only 5.5% of brokers felt demand was either ‘strong’ or ‘very strong’.

The percentage of brokers who expect to write more buy-to-let business in the next 12 months has risen from 41% in June to 49% in September.

Again, these figures are in stark contrast to the same period a year ago, where only 17.5% of intermediaries expected to do more business over the next 12 months. The response was much more subdued back in September 2019 with the majority, 65.7%, expecting business levels to ‘stay the same’ compared to this year, where 36% expect no change.

The increasing confidence supports the idea that the market is recovering strongly following the impact of the Covid-19 pandemic.

The survey of over 200 mortgage intermediaries also sought to understand brokers’ opinions on the factors influencing the current and future state of the market, in particular the changes introduced by the Government during the summer.

After being asked to rank the impact of changes announced in Chancellor Rishi Sunak’s Summer Statement, an overwhelming majority of brokers placed the temporary cut in Stamp Duty Land Tax first place. Planning reforms were the second most popular choice, followed by the Short-term Home Building Fund Extension, with Green Homes Grant deemed to be the initiative that would stimulate the market the least.

The current but temporary effect of the stamp duty holiday does lead to some apprehension, however. Despite positive outlooks for the next year, some brokers expect to see a dip in mortgage activity following the end of the scheme in March 2021.

Richard Rowntree, managing director for mortgages at Paragon, said: Our latest FACT Index has come at a really interesting time because it highlights how the market is strong at the moment and looks set to continue to perform well over the coming months. Brokers feel that a significant driver of this is the stamp duty holiday so we may see a different landscape once the initiative comes to an end in March next year.

He said, history has shown that we can see peaks and troughs in activity in the lead up to and following important policy changes and these are just indicative of the dynamic nature of the market. I feel that demand will ease off to more typical levels, so when we look at it over a longer term, we will see a return to stability.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.