Volume of let-to-buy mortgages up as MCD deadline approaches

As lenders prepare for the implementation of the Mortgage Credit Directive (MCD) in March, Paragon Mortgages’ latest Financial Advisors Confidence Tracking (FACT) report reveals that in Q4 2015 nearly one in eight of mortgage cases dealt with by brokers related to let-to-buy.

As a result of the regulatory developments driven by MCD many let-to-buy mortgages will be regulated because they are captured under the regulatory definition for Consumer Buy-to-Let. This will include loans where a customer has no other rental properties, and is looking to remortgage a property they have previously lived in – commonly known as ‘let-to-buy’.

The latest FACT data – which has been tracking sentiment among financial advisors for 20 years – found that, in Q4 2015, 12% of mortgage cases were let-to-buy. This figure is up from 10.6% in Q3 2015.

The latest data also reveals that, while for a majority of mortgage advisors, let-to-buy accounts for less than 5% of business, for a substantial minority (10%) let-to-buy accounted for more than 30% of business in Q4 2015.

Despite this trend however, 60% of respondents thought the implementation of the MCD in March would have no impact on levels of let-to-buy business, while a quarter thought it would lead to less, as compared to 11% who said it would lead to more.

John Heron, Director of Mortgages, said: “Despite financial advisors expressing some scepticism about what impact the MCD will have on let-to-buy business volumes, we have seen a clear uptick in the volume of let-to-buy mortgages being written in Q4 2015.

“Paragon have been working hard to ensure we are prepared for this change, so that we can continue to offer a comprehensive range of mortgage solutions for buy-to-let landlords.”