Buy-to-Let Remortgaging on the Rise
The Funding for Lending scheme has helped boost both affordability and availability across the buy to let mortgage market, so more investors in property are refinancing to be able to buy more properties later this year.
In April to June, the number of lenders did not rise, but the number of available deals rose to 465 – an increase of just over 30 on the first quarter. As a proportion of deals on all kinds of property (apart from vanilla), remortgaging rose during the quarter.
The biggest rise was with semi-commercial property, in which remortgages made up 90% of all deals.
Refinancing was accountable for nearly 90% (88%) of all multi-unit freehold block deals, an increase from three quarters in the first three months of the year. At the same time, just under 85% of all Houses in Multiple Occupation (HMO) deals were remortgages, up from 69%.
During the same period, gross yields fell on all property types apart from semi-commercial property. However, they stayed strong in the face of rising loan amounts and property values.
Yields on semi-commercial property rose steeply from 8.2% earlier in the year to 11.4% in the second quarter. Investors bought pricier property of this type between April and June, with more high value, high yielding properties than generally seen.
Mortgages for Business Managing Director David Whittaker said: “Buy to let mortgages are now more affordable than they have been since the downturn. Lenders have used the Funding for Lending Scheme and passed on some of the savings generated to property investors with greater choice and lower rates.
“We’ve seen a record level of refinancing, and landlords are increasingly using great remortgage deals to increase their portfolios at a later stage. Even though yields have fallen a little on many property types, they are still strong – and look set to stay that way.
“While there has been a modest increase in numbers looking to buy their first home, the demand for rented accommodation is still incredibly high.”