Buy-To-Let Remortgaging Eclipses Property Purchase Borrowing

Buy-To-Let Remortgaging Eclipses Property Purchase Borrowing

Buy-To-Let Remortgage Surge

Buy-to-let remortgages have witnessed a huge surge in demand during the second quarter of 2013, as existing landlords refinance to raise capital for further rental property purchases.

Remortgaging activity has eclipsed all other types of mortgage transactions covering multiple property types, other than granting new mortgages for buy-to-let property purchases.

  • Semi-commercial property saw the largest increase in activity with remortgages accounting for 90% of all transactions.
  • Refinancing also accounted for 88% of all multi-unit freehold block deals
  • 84% of Houses in Multiple Occupation (HMO) deals were remortgages.

Standard Buy-To-Let properties were the only property type where remortgaging actually dropped as a proportion of all mortgage transactions, although it still accounted for 60% of deals.

Buy-to-let mortgages are even more affordable for landlords and property investors, looking to cash in on the strong demand for quality rental accommodation, since the downturn in the UK economy saw an exodus away from home ownership and the move toward the Continental way of life for “Generation Rent”.

Banks and mainstream mortgage lenders have gratefully accepted Government help to boost the UK property market, using the Funding for Lending scheme to underwrite first-time buyer mortgages and even managing to pass some savings on to serious property investors in the form of lower rates and a wider choice of Buy-To-Let mortgage products.

The result has been a more relaxed approach from lenders with regard to the ultra strict criteria introduced post crash and this has encouraged a record proportion of refinancing by portfolio landlords, who want to take advantage of cheaper buy-to-let remortgage deals in order to expand their rental property portfolios.

Rental yields have only fallen slightly on most Buy-To-Let property types but the returns remain strong and look set to stay that way for a few years. Even though tenant demand for private sector rental property is cooling compared to previous months, demand remains high, despite the slight improvement in first-time buyer numbers taking advantage of Government initiatives that intended to kick start the property sales market and make the UK property market a stronghold for the nation’s economy.

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