There is evidence of a split in the buy-to-let market, with the number of landlords extending their portfolio increasing but remortgaging activity tumbling.
Almost half of landlords (48 per cent) obtained a mortgage to extend their portfolio in the third quarter of 2009 – a vast improvement on quarter four of 2008, when 31 per cent of landlords said they had taken out a buy-to-let mortgage to do so.
It is the highest percentage to have said they were expanding their portfolio since Paragon mortgages started the Financial Adviser Confidence tracker index in 2001.
'It is encouraging that landlords are now adding to their portfolios. We haven't experienced the mass sell-off of buy-to-let property during the recession that some commentators were predicting, but buying activity has been subdued," said John Heron, managing director at Paragon Mortgages.
"As house prices have stabilised, landlords now obviously believe that it is a good time to start expanding before house price inflation picks up again."
However, the index also found that 39 per cent of landlords obtained a buy-to-let mortgage through a financial adviser for remortgage purposes in the three months to September, the lowest level for a quarter since the first three months of 2007.
"Landlords are not remortgaging for two reasons - they can't because of the low number of mortgages available and there is little incentive to do so because the reversion rates when coming off an introductory deal are so attractive due to the low Bank of England base rate and libor," Mr Heron commented.
"Landlords are happy to stay with their existing lender and we think this will remain the case for the foreseeable future."
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