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Sharp Decline in Buy-to-Let Mortgages

Recent analysis of Financial Conduct Authority data by Bird & Co reveals a significant drop in buy-to-let mortgages and a rise in remortgaging as property investors and homeowners adapt to changing economic conditions.

Bird & Co has reported a substantial 37% decrease in buy-to-let mortgages in the fiscal year 2022-23, underlining a steep decline in property investment interest. Additionally, the firm highlighted that mortgage arrears on these properties have doubled to £51 million, exacerbated by the rapid increase in interest rates over the past year.

Rising Trend in Remortgaging
In contrast to the decline in buy-to-let loans, there has been a 57% surge in remortgaging during the same period—the largest annual change witnessed in the last five years. According to Bird & Co, this indicates that homeowners are increasingly seeking better interest rates and more manageable payment options to mitigate financial uncertainty. This shift suggests a cautious but proactive approach among homeowners to leverage home equity for financial stability.

Tightening Credit Conditions
The report also pointed out a decrease in lending to individuals with poor credit histories and single-income households, with loans to these groups dropping by 4% and 10%, respectively. Daniel Chard, Partner at Bird & Co, commented on the broader implications of these trends: “The concerning trend of buy-to-let advances consistently lagging behind the average raises questions about the attractiveness of property investment in current economic circumstances.” He added, “The surge in remortgages suggests homeowners are cautiously tapping into the benefits of home equity, whether for debt consolidation or to invest further—and they aren’t afraid to switch lenders to get the best deal possible.”

Chard warned that these trends could pose challenges for future borrowers, as “access to credit becomes increasingly selective, impacting their ability to secure loans and fulfil their property aspirations.” This situation reflects a tightening of lending criteria, potentially marginalizing certain groups from the property market.


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