Richard Rowntree, Managing Director of Mortgages at Paragon Bank, comments on the Household Finance Review, which was published today and includes 2020 Q4 lending figures for the buy-to-let market. You can view the announcement here.
“The final quarter of last year marked the return of landlords buying new property as they reacted to the Stamp Duty Holiday and strong levels of tenant demand. The 22,500 loans written for buy-to-let house purchase during the period was the strongest since Q1 2016, when the Stamp Duty surcharge was introduced. In terms of value, £3.4 billion was lent for the purchase of new buy-to-let property during Q4, again the highest level since the first quarter of 2016.
“The strong final quarter helped the buy-to-let sector recover some of the lost ground from the early days of coronavirus and overall lending for the year was down just 13% on 2019 at £37 billion. I’m sure many in the industry would have feared a much worse result when the housing market was closed, so the bounce back during the second half of 2020 was encouraging, demonstrating the sector’s resilience and effective response to the pandemic.
“Demand for buy-to-let mortgages has been strong as rented property has provided a stable home for many during a time of uncertainty and landlords have modified their portfolios in response to the needs of tenants that have changed as a result of the pandemic.
“I anticipate that we will continue to see strong levels of house purchase activity in the first and second quarters of 2021 as landlords complete transactions ahead of the Stamp Duty holiday deadline. The sector is prepared to manage the pipeline to ensure that those who have entered into the property buying process are able to complete before the new 30 June deadline, announced yesterday as part of the budget.”
He added: “The figures have also revealed that the general downward trend in remortgage activity seen since 2018 has continued. We anticipate that this will be reversed and new business in Q2 will be driven by remortgage activity as significant numbers of five-year fixed rate mortgages, which increased in popularity in response to the introduction of the buy-to-let Stamp Duty surcharge in April 2016, are set to reach maturity.”