Resurgence Of Buy To Let Lending

There has been a resurgence of buy to let lending recently as landlords extend their portfolios through remortgaging

Increased confidence amongst landlords has triggered a rise in the volume of buy to let lending. Landlords are increasingly looking to remortgage their existing properties to help extend their portfolios.

In its latest report, the Council of Mortgage Lending revealed that remortgaging hit its highest level since the final quarter of 2008 during the second quarter of this year.

Paragon Mortgages’ intermediary survey showed capital raising was the number one reason for landlords remortgaging during the second quarter. On average, nearly five out of ten (47%) buy-to-let remortgages handled by intermediaries surveyed were for the purpose of raising capital, whilst three out of ten (35%) were to achieve a better rate of interest.

Other reasons for remortgaging included landlords’ existing lenders actively encouraging remortgaging and dissatisfaction with an existing lender.

According to John Heron, Paragon Mortgages’ Managing Director, “approximately two thirds of properties in the private rented sector have no mortgage whilst the average loan-to-value on those properties with a mortgage is 48%, so there is a huge amount of equity in the sector that landlords are looking to utilise to help fund portfolio growth.”

MoneyHighStreet Comments:

It is little wonder that landlords are finding ways to increase the number of rental properties as recent research shows that there are almost twice as many people renting rather than buying and that a fall in home ownership will force more people to rent in future years.

With such a buoyant outlook for the rental market, it is interesting to see that landlords want to use equity in their properties as security against new purchases rather than trying to reduce their mortgage exposure.