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The proportion of landlords remortgaging their investment properties has fallen to its lowest level for over two years, research from Paragon Mortgages has revealed.

Paragon Mortgages' latest survey found that 39% of landlords obtained a buy-to-let mortgage via a financial adviser for remortgage purposes in the third quarter of 2009, the lowest level recorded since the first quarter of 2007.

In contrast, the proportion of landlords obtaining buy-to-let mortgages for portfolio expansion purposes has hit its highest level since the survey began in 2001. It found that 48% of landlords obtained a mortgage to extend their portfolio in the third quarter of 2009 – more landlords are taking advantage of cheap house prices and a glut of renters looking for a property.

These statistics represent a rapid recovery for landlords from the final quarter of 2008, when just 31% of landlords were taking out a buy-to-let mortgage for portfolio expansion reasons.

John Heron, Paragon Mortgages' managing director, says: "Landlords are not remortgaging for two reasons – they can't because of the low number of mortgages available and there is little incentive to do so because the reversion rates when coming off an introductory deal are so attractive due to the low Bank of England base rate. Landlords are happy to stay with their existing lender and we think this will remain the case for the foreseeable future.

"It is encouraging that landlords are now adding to their portfolios. We haven't experienced the mass sell-off of buy-to-let property during the recession that some commentators were predicting, but buying activity has been subdued. As house prices have stabilised, landlords now obviously believe that it is a good time to start expanding before house price inflation picks up again."

SOURCE: Paragon, 26/11/09

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