The research showed strong growth in the buy-to-let market, with levels rising from 10 per cent of cases in December 2004, rising steadily during 2005 and early 2006 to reach 14 per cent now. Looking further back, the proportion was just 6 per cent in June 2001.
John Heron, managing director of Paragon Mortgages, said: “Financial advisers have benefited from the buoyancy of buy-to-let, particularly over the past 12 months. The proportion of advisers’ business represented by buy-to-let is higher than it has been for many years.”
Indeed, the survey revealed sentiment among financial advisers was following a positive upward trend, with advisers as confident as they have been at any time since 1999. Advisers expect to do 7 per cent more mortgage business in the second quarter of 2006 than they did in the first quarter. This contrasts strikingly with adviser sentiment at the end of 2004, when they expected quarter-on-quarter business growth of no more than 0.9 per cent.
Their new-found confidence looks justified. The average number of mortgages introduced per adviser during the first quarter was 27.6 cases, 9 per cent higher than the same period of 2005 (25.3 mortgages introduced).
Heron said: “Having taken mortgage regulation in their stride, financial advisers are feeling upbeat about their current business and future prospects. Confidence hasn’t been higher since 1999.”
While current business levels and future prospects remain buoyant, the research highlighted that first-time buyer (FTB) activity continues to be subdued. The proportion of FTB loans arranged declined from 11 per cent six months ago to 9 per cent now. This compares with almost 20 per cent five years ago.
As well as the surge in buy-to-let business, this quarter saw a significant pick-up in loans to existing homeowners who are moving, from 23 per cent to 25 per cent. The proportion of remortgage cases has followed a generally downward trend over the past 18 months, but still represents 51 per cent of the total, compared with 54 per cent in September 2005.
Heron concluded: “Remortgaging levels have eased slightly and first-time buyer activity remains subdued. But buy-to-let continues to be busy, having followed a steadily upward trend over the past 18 months. Landlords know that long term demographic trends continue to underpin the private rented sector and are adding to their portfolios based on unabated demand from tenants.”
