Remortgaging still makes up most BTL activity

Remortgaging still makes up most BTL activity

Remortgaging continued to account for the bulk of buy-to-let activity in the last quarter of 2016.

But according to Mortgages for Business’ complex buy-to-let index, lending for purchase is beginning to make a comeback.

The share of lending for purchases in the standard BTL market grew from 28 per cent in the third quarter to 38 per cent in the fourth.

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Figures from the Bank of England earlier this month showed that in November there were 45,683 approvals for remortgages, their highest level in eight years.

Remortgaging has been increasing since August when the Bank of England lowered interest rates to 0.25 per cent.

David Whittaker, chief executive of Mortgages for Business, said: “It is encouraging to see that the share of lending for purchase in the buy to let mortgage market returned to normal in Q4 2016.

“Following a notable shift towards lending for remortgage in the third quarter, landlords showed they were once again willing to commit to new purchases.

“The outcome of the EU referendum, and the subsequent macro-economic uncertainty dampened purchase lending in Q3, with many landlords initially opting for a cautious approach.

“While changes to stamp duty on second properties and landlords’ tax relief mean that landlords need to approach their investments intelligently, there are still excellent returns to be had in the market – especially compared to other asset classes.”

In the houses in multiple occupation lending market the share of purchases rose to 26 per cent.

This is below the level seen in the second quarter of 2016 but it brings this part of the market back in line with the level seen before the announcement of the changes to landlords’ tax relief in 2015.

The results of the index also show that the average loan to value ratios across all products remained stable at 67 per cent in the final quarter of 2016. Gross yields also remain unchanged.