Large unexpected rise in buy-to-let mortgages

While the mortgage market might be declining, buy to let investors and those remortgaging have delivered the largest uptick in activity, research reveals.

However, Octane Capital says that home movers remain the largest category within residential mortgage lending.

Shift in the landscape

The lender’s chief executive, Jonathan Samuels, said: “The residential mortgage sector is yet to show any signs that the current cooling market is anything other than a gradual return to normality following the pandemic market boom.”

He added: “However, what we certainly are seeing is a shift in the landscape.

“While home movers still account for the majority of residential market activity, growing uncertainty around market health has caused this number to decline, with many choosing to stay put and remortgage instead.”

Mainstream home movers are the single biggest sector in residential mortgage market

At nearly £100 billion (£99.7bn) mainstream home movers continue to be the single biggest sector in the residential mortgage market. Although with economic conditions worsening, total loans to home movers fell by 16% in 2022.

However, BTL loans have climbed by 12% over the last year, making this the biggest proportional rise in the sector.

Mr Samuels added: “Instead, it is the buy-to-let space that has, perhaps surprisingly, shown the strongest and most consistent growth in recent years.

“It’s clear that with the number of loans issued to home movers on the decline, brokers should be turning their attention to this segment of the market to capitalise on increasing demand.”

Many homeowners are deciding to stay put

With the market in decline, the number of house moves is also falling by -16% in 2022.

However, the opposite is happening when it comes to remortgaging.

In the last year, there has been a 31.3% jump in the value of loans issued to remortgagers, hitting a total of £87bn, the second highest of all sub sectors.

This illustrates that given the conditions of the market, many homeowners are deciding to stay put and remortgaging instead.