Landlords show increased remortgage activity

Landlords show increased remortgage activity

Remortgaging accounted for approximately two thirds of standard buy-to-let mortgage transactions in the first quarter of 2015, analysis from a mortgage advisory firm has claimed.

The complex BTL index Q1 2015, released by Kent-based Mortgages for Business, showed that in the first quarter of the year, 66 per cent of mortgages against standard BTL property were remortgaging loans, leaving 34 per cent for the purpose of buying a new property.

In the fourth quarter of 2014, remortgaging made up 62 per cent of standard BTL mortgages, compared to 65 per cent in the third quarter and 70 per cent in the second quarter.

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Remortgaging rates were even higher for other property types.

Statistics for standard buy-to-letQ4 2014Q1 2015
Average loan size£222,565£206,771
Average property value£354,423£325,891
Average loan to value63%66%
Average yield6.3%6.4%

Source: Mortgages for Business complex buy-to-let index Q1 2015

The index, which tracks mortgage transaction data for ‘vanilla’ BTL houses in multiple occupation, multi-unit freehold blocks and semi-commercial property, found that HMO remortgaging had reached 73 per cent in the first quarter of 2015, up from 70 per cent in the previous quarter.

For MUFBs remortgaging represented 89 per cent of mortgages in the quarter, compared to just 42 per cent in the final quarter of 2014.

David Whittaker, managing director of Mortgages for Business, said: “Record low mortgage rates are driving wave upon wave of landlords to reassess their finances.

“A great deal agreed last year may be uncompetitive by today’s standards. So this stampede is completely rational.”

The index also showed that average standard BTL loan-to-value ratio had increased slightly, from 63 per cent in the fourth quarter of 2014 to 66 per cent, and that the average loan size for a standard BTL had increased from £222,565 in the fourth quarter of 2014 to £206,771.

Adviser view

Mark Harris, chief executive of London-based SPF Private Clients, said: “A combination of cheap mortgage rates, easing criteria and poor savings rates are convincing many that investment property is a sensible home for their money.”