What areas of the market are proving popular?

Brokers have discussed popular areas of the mortgage market

What areas of the market are proving popular?

With the mortgage market enduring many twists and turns in recent times, identifying what areas of the sector are proving popular has become a tough task.

As each individual borrower has encountered unique challenges, brokers have differing views on what areas are proving the most popular, for better or worse. However, a number of brokers believe the buy-to-let market stands above the rest. Read on to find out what they said.

Winds blowing in different directions

Kundan Bhaduri (pictured left), property developer and portfolio landlord at The Kushman Group, said amid the ebb and flow of the property market, he had seen the winds blow in different directions this year.

“From maturing tenant demographic, with average tenants now being older than ever before, to the prominence of build-to-rent properties, the investment landscape has shifted in 2023,” he said.

Bhaduri explained that energy efficiency had gained prominence while rental 'reforms' loomed on the horizon; consequently, he added, it was anticipated that there would be 300% more landlords selling up this year.

“Incorporation is now the name of the game; three-quarters of UK landlords have embraced the benefits of limited companies for their property investments,” he said.

Over the remainder of the year and into the next, Bhaduri said, capital gains tax (CGT) allowance cuts would ripple through the market, and landlords would feel the squeeze as most allowances dwindled, effectively increasing their tax burden.

“The cost-of-living crisis has also cast a shadow over the buy-to-let market, leading to difficulties for many in securing financing; from seasoned investors to first-time buyers, the game has become more exciting this year,” he said.

Darryl Dhoffer (pictured right), mortgage expert at The Mortgage Expert, concurred that the buy-to-let market was receiving greater interest than others at present due to the complications surrounding the sector.

“Another part of the market witnessing increased interest, sadly, is those with adverse credit issues, including, minor credit blips to IVAs, DROs, DMPs and bankruptcies,” Dhoffer added.

Stephen Perkins, managing director at Yellow Brick Mortgages, agreed that a growing market trend seemed to be limited company buy-to-let mortgages, due to the lower thresholds on stress-testing, and being able to offset the mortgage against the rental income for tax purposes.

“Houses under Multiple Occupation (HMO) and holiday-let mortgages, are also growing in interest, as these have a higher rental profit, which has been squeezed out of the more traditional landlord properties,” he said.

Another area of rising popularity, Perkins said, was remortgages and product transfers, as clients were now more keen than ever to start discussions early and secure rates. Whereas he added first-time buyer and home mover applications had slowed somewhat due to the cost-of-living and rising mortgage rates affecting the housing market demand.

Influencing conditions

Nick Hayes, managing director at Pia Financial Solutions, said with the recent changes in mortgage rates and the uncertainty in the market, he had also seen a big increase in the number of clients looking for advice when remortgaging.

“When a client's mortgage deal came to an end in the past, it was an easy decision to stay with the existing lender as the new deal was probably cheaper than their existing rate,” Hayes said.

Now, he added, borrowers were facing significant increases as their existing deals expired, and were therefore turning to brokers for advice and help in securing the best deal.

“This comes at a turbulent time in the mortgage market with lenders pulling deals at very short notice, and this is causing problems for both borrowers and brokers as they try to secure the best deals before they are withdrawn,” Hayes said.

What areas of the mortgage market have you seen proving popular in recent times? Let us know in the comment section below.