Posted on Monday, April 19, 2021
When trying to predict what will happen next in any market, it helps to speak with people involved with transactions every day or week. In the mortgage sector, intermediaries connect clients with lenders, and their thoughts on how the market is performing is often a strong indicator of what will unfold.
A recent study by Paragon Bank spoke to close to 200 intermediaries. The findings of the study should provide optimism for the future of the buy-to-let (BTL) market.
50% of respondents anticipated higher levels of buy-to-let mortgage business in the next year, compared to last year. With the property market shutting down for part of 2020, this might not seem like an outlandish claim.
However, let’s not forget that there was significant activity when the property and mortgage market reopened. Landlords and investors could capitalise on the stamp duty holiday too, so there was additional movement in the BTL sector in 2020.
21% of respondents said they expect transactions to rise by at least 10%.
The level of optimism for the year that lies ahead is higher than what a similar survey in the final quarter of 2020 predicted. Then, just 41% of intermediaries believed there would be a more significant activity level in the 12 months that lie ahead.
So, there is greater optimism about what happens next.
A significant factor in why more intermediaries are hopeful for a busy year lies in demand for BTL mortgages. 47% of brokers stated the demand for these mortgages was “strong” or “very strong”. This represents a modest increase from the 44% who said similar in the final quarter of 2020.
Also, the proportion of intermediaries who believe demand is “weak” or “very weak” is at its lowest level since before the pandemic.
Richard Rowntree, Paragon Bank Managing Director of Mortgages, commented: “We know that brokers have an excellent grasp of current conditions and can often accurately predict how things will pan out in the coming months so our quarterly Financial Adviser Confidence Tracker survey provides a useful picture of the mortgage market.”
Richard also said; “It’s fantastic to see that such high levels of optimism have been recorded following the challenges of the past year or so and that this is being driven by strong levels of demand. The extension of the Stamp Duty holiday is certainly a driver of that, but it is underpinned by longer-term demand for rental property.”
There has also been positive news for the letting industry in findings published by a leading estate agency. In 2020, landlords sold 131,900 properties across Great Britain. This number is the lowest figure for these sales since 2013.
For the landlords who sold a rental property, the sale price was, on average, £82,450 higher than the price they paid to buy it. This return represents a 42% increase.
Therefore, if you are a landlord considering selling your rental property, the average prices indicate you should enjoy a good return on your initial investment. However, with so many landlords choosing to remain in the rental sector, it indicates confidence in the strength of the market.
When you are looking for specialist support in selling or letting, choose a local agent who listens to their clients carefully and takes pride in providing the utmost in customer care. We appreciate these are challenging times, but if you have any property market questions, please feel free to contact Aspire Sales, Lettings & Property Management, and we will do our best to assist you.