One-fifth of remortgages are taken out to buy a second property, according to a survey by Paragon Mortgages.
Six months ago, the figure was 15 per cent. Paragon believes the increase is a result of buoyant house price inflation increasing the equity in people's houses, which they then release to buy second homes.
Paragon's survey of brokers shows that remortgages are the biggest category of mortgages arranged, at 51 per cent of the total, although this is a small decline from last summer's peak of 53 per cent.
Buy to let has increased to 12 per cent from 11 per cent while first-time buyers account for just 10 per cent of lending, down from 19 per cent two-and-a-half years ago.
The survey shows that business volumes grew by 8 per cent in the last quarter of 2003 to 32.4 cases from 30.1 cases in the previous quarter. Growth of 1.3 per cent is expected in the coming quarter.
Managing director John Heron says: “2003 proved a bumper year for the mortgage market, with advisers seeing very good business levels. They remain cautiously optimistic for 2004 although a lower level of growth is expected this quarter than last quarter. This supports the view that the housing and mortgage markets are entering a period of consolidation.”