Nearly half of mortgage intermediaries reported an increase in buy-to-let business during the first quarter of the year, Paragon Mortgages’ research has found.
Paragon’s Financial Adviser Confidence Tracking (FACT) Index, a panel survey of approximately 200 intermediaries, found that 46 per cent of respondents reported higher levels of buy-to-let business during the period compared with the fourth quarter of 2010.
Nearly one in five (18 per cent) intermediaries reported an increase in buy-to-let business of more than 10 per cent during the period, whilst 13 per cent recorded increased business levels of between 6 per cent and 10 per cent. Meanwhile, 15 per cent said buy-to-let business was up by 5 per cent, whilst 45 per cent said that buy-to-let business levels had remained unchanged during the first three months of the year.
Buy-to-let was one of the only growth sectors of the mortgage market in 2010, with gross advances increasing by 22 per cent according to Council of Mortgage Lenders figures. A recent report by market research specialist Datamonitor, entitled UK Mortgage Market in 2011 and Future Outlook, concluded that buy-to-let is the only sector of the market that will experience ‘significant growth in 2011′.
Paragon’s FACT Index also showed that 53 per cent of intermediaries reported improving credit conditions in the buy-to-let market during the first quarter, with wider product availability and easing criteria levels. Looking forward, 56 per cent of intermediaries forecast that product availability will improve further during the second quarter of 2011.
The distribution of buy-to-let mortgages introduced by financial advisers in the first quarter in terms of their loan-to-value ratios (LTV) shows the average LTV was 65 per cent. FACT showed 25 per cent of mortgages had an LTV up to 60 per cent, 33 per cent were between 61 per cent and 70 per cent LTV, 31 per cent were between 71 per cent and 75 per cent LTV, and 11 per cent over 75 per cent LTV.
John Heron, Paragon Mortgages managing director, said: “These figures demonstrate intermediaries’ growing confidence in buy-to-let. Nearly half of intermediaries reported an increase in business levels during the quarter, with one in five increasing their buy-to-let business by more than 10 per cent. Landlord demand is clearly strong and buy-to-let finance is becoming more readily available to meet that demand. Although we are obviously not operating at ‘normal’ market levels, buy-to-let is on the road to recovery.”
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