Paragon Bank has predicted that an increase in buy-to-let remortgage activity will be a key market trend in 2022.

The specialist lender says it is putting plans in place to ensure it is well equipped to manage a wave of five-year fixed rate mortgages that are set to mature throughout the next year. This is because of a steep increase in borrowers opting to fix their mortgage rates over longer terms in response to the introduction of new underwriting standards by the Prudential Regulation Authority (PRA) in 2017.

Industry data shows a rise in the number of five-year fixed rate mortgages – from 3,008 to 4,167 – written between December 2016 and January 2017. This figure then increased to 10,717 over the following year to January 2018, seldom slipping below the 10,000 mark since.

Moray Hulme (pictured), Paragon Bank mortgage sales director, said: “Five years ago, the PRA introduced new underwriting standards that required lenders to take a more holistic approach to assessing mortgage affordability.

“This correlates with 2017 seeing a significant increase in the volume of mortgages fixed over five years. As a result, we’re anticipating strong levels of remortgage business throughout the next year.

“This presents a fantastic opportunity for brokers to generate business and, with the process often involving additional borrowing, we recommend that they do this at the earliest opportunity.”

Paragon also predicts tenant demand to remain robust. Since the start of the pandemic, around a third of employees have started to work remotely to some degree. The threat of the Omicron variant has led the Government to request that everyone who is able, to do the same and this is likely to lead to further reassessment of what is important about our homes, maintaining the strong tenant demand we’ve experienced throughout 2021.

The bank also expects continued pressure on property supply. This demand will sustain the pressure on supply which Paragon argues has been accelerated by the pandemic, not caused by it. It is likely that the Government will face mounting calls to balance policy between protecting tenants while removing fiscal and regulatory barriers to private investment in the UK’s second largest tenure.

Meanwhile, Paragon also believes there will be growth in green offerings. With the deadline for the Government’s proposed changes to EPC requirements looming, the next year will see lenders increase their offerings that facilitate and incentivise the buying of more energy efficient homes. With a substantial proportion of the sector’s stock requiring costly upgrades to meet any new standards, lenders will also look to find new ways to support landlords with environmentally focused finance products.

Hulme added: “The sector has shone during another incredible year and with 2022 shaping up to be equally eventful, we look forward to working with our industry partners to support landlords in providing good quality, affordable homes for millions of tenants in the UK.”