High hopes for more buy to let mortgage lending

High hopes for more buy to let mortgage lending

17:43 PM, 25th January 2011, About 13 years ago 3

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Buy to let mortgage brokers are among the most resilient optimists as more than half expect to help property investors purchase more homes to let this year. 

This forlorn hope is against a miserable back drop of a stalling economy, tax and interest rate uncertainty and lenders unequivocally stating they will not lend more in 2011 than last year.

Despite this, 46% of brokers expect to write more buy to let loans and half considered buy to let mortgage availability improved in the last quarter of 2010.

These astonishing claims at a time when lenders admit mortgage funding had dropped back to the lowest level for a decade are trumpeted as a sign that the buy to let mortgage market ‘return to health is continuing to gather pace’ by specialist landlord lender Paragon Mortgages.

The figures come from Paragon’s latest Financial Adviser Confidence Tracking Index (FACT), a panel-based survey of mortgage brokers.

Brokers arrange 90% of  landlord loans

On closer inspection, the figures disclose two out of 10 advisers (17%) expect to see an increase in buy to let business of 10% or more during 2011, with 29% expecting to do up to 10% more business.

John Heron, Paragon Mortgages managing director, said: “We are clearly now in a more buoyant phase for the buy to let market – 2010 was the turning point for the sector and it enters this year on the front foot and with confidence.

“As approximately nine out of 10 buy to let mortgages are introduced via intermediaries, it is extremely encouraging that nearly half of brokers expect to increase business levels in 2011. This, in turn, should attract a greater number of lenders and borrowers to the market.”

The true extent of the buy to let market in the final months of 2010 will be revealed by the Council of Mortgage Lenders – the trade body for all major mortgage lending  banks and building societies – on February 11.

If these figures follow the trend of residential mortgage data already published, December lending was the lowest on record for 10 years.

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Sunil Lad

8:13 AM, 27th January 2011, About 13 years ago

Question for John Heron ( Paragon Mortgages)
When I started building our property portfolio our broker introduced us to Paragon and we completed purchases which were on very attractive mortgage products. Due to the recent credit crisis all this has changed and things are on hold.
When (if not soon) will Paragon bing out BTL products which are individually tailored to landlords who have a proven record of successful management, thereby reducing the risk associated in lending to speculators and inexperience investors.
We would be interest to know as at the present moment everyone have made it impossible for landlords to invest without paying unreasonable fees and LTV are just silly.


Mark Alexander - Founder of Property118

9:06 AM, 27th January 2011, About 13 years ago

Dear Sunil

Thank you for your question.

As it happens John Heron, Managing Director of Paragon Mortgages is a good friend of mine so I will invite him to respond.

A really good article for you to read, which will hopefully answer your questions, is THIS ONE, written by Mike Woodfine, my business partner in The Money Centre. Mike is also a very good friend of John Heron. Mike's article is entitled, Bunch of Robbing Bankers! Very informative and good humoured - typical of Mike.

Note that Mike's article was written back in November last year. Nothing much has changed since then.

I also wrote an article speculating on when and why interest rate margins would reduce - you can read it here.

I hope this helps.


Mark Alexander

Mark Alexander - Founder of Property118

13:39 PM, 27th January 2011, About 13 years ago


Hi Mark.

Please see response below, would be grateful if you would post it for me:

Dear Sunil,

Thanks for your question.

The buy-to-let market was decimated by the credit crunch but I’m pleased to say that positives are emerging, and new buy-to-let deals are coming to the table all the time as financial markets recover. Paragon returned to new lending in October last year and is offering loans to professional landlords that are not easily available elsewhere. This includes lending to limited companies, higher aggregate lending of up to £5m and facilities for Houses in Multiple Occupation, multi-unit blocks, student lets and other more complex areas of lending.

However, as you’re no doubt aware, financial markets have been through a major crisis since 2007 and are still adjusting, whilst lenders are also adjusting to new capital rules that require them to hold a great deal more capital than previously. The mortgage market in general is a long way from “normal” conditions, and mortgages of all kinds will remain in short supply for some time. In addition, the cost of that money will remain high to where it was in 2007.


John Heron

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