Number of let-to-buy mortgages amplified by MCD deadline

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.”

Volume of business which is consumer buy-to-let

                                Sep 2015              Dec 2015

Up to 5%              38%                        43%       

6 – 10%                 36%                        28%

11 – 20%              12%                        18%

21 – 30%              5%                          2%

31 – 50%              6%                          5%

50% +                    2%                          5%

Expected impact of MCD on volume of let-to-buy business

                                                                Sep 2015              Dec 2015

Much more business                     1%                          3%

A little more business                   11%                        8%

No change                                       70%                        60%

A little less business                      15%                        23%

Much less business                        2%                          4%