Posts with tag: Buy-to-let remortgaging

Remortgaging for BTL on the rise

Published On: May 8, 2015 at 10:13 am

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Recent figures have suggested that around two-thirds of Buy to Let loans are now for remortgaging-almost twice the rate of new purchases.

Statistics from the latest Mortgages for Business Complex Buy to Let Index suggest that during the first quarter of 2015, 66% of BTL loans were for remortgaging, with just 34% for fresh buys. [1]

With regards to houses in multiple occupation (HMO’s), remortgaging gained an even larger proportion, with 73% of all transactions. This trend was even greater for multi-unit freehold blocks (MUFB’s), with remortgaging accounting for 89% of mortgages in the first quarter of 2015. This was a remarkable rise from 42% in the last quarter of 2014. [2]

LTV Rise

Corresponding with the increase in remortgaging, loan to values (LTV’s) have also risen. The average LTV for a buy to let property now stands at 66%, as opposed to 63% during quarter 4 of 2014.[3]

For HMO’s, landlords have experienced rises in LTV to 70% in the last three months from 64% in quarter four of 2014. MUFB property LTV’s are up to an average of 67% from 64% during the same period.

Managing director of Mortgages for Business David Whittaker, commented that, ‘record low mortgage rates are driving wave upon wave of landlords to reassess their finances.’ Whittaker believes, ‘a great deal agreed last year may be uncompetitive by today’s standards, so this stampede is completely rational-it represents a charge by landlords to make the most of an unprecedented economic situation.’[4]

Remortgaging for BTL on the rise

Remortgaging for BTL on the rise

Mr Whittaker went on to say that, ‘remortgaging is often done for the purpose of raising extra capital and this is clearly reflected in higher loan to value ratios. However, this is by no means an unwelcome trend-and could in turn open the door to more new purchases and investment by landlords.’ He also noted that, ‘rental yields are healthy and there is a gathering demand from an increasingly prosperous base of tenants,’ therefore the, ‘fundamentals of the rental market-and of landlords’ finances-are still extremely solid.’[5

Yields increase

Whittaker’s comment on rental yields being, ‘healthy’ is backed up by statistics, which show that gross returns have risen to 6.4%, slightly up from the 6.3% recorded during the final three months of 2014. Gross rental yields for HMO’s have also risen, now standing at 10.4%, from 9% in quarter four of 2014.[6]

In a concluding statement, Mr Whittaker said, ‘Landlords are reporting a buoyant rental market, driven in large part by a resurgent jobs market – and now even more encouraging signs on wages.

‘In turn, this will stimulate many landlords to invest further although one major hold-up in an otherwise sunny outlook is a long shadow of political uncertainty.’

‘This is only partly about specific policies. For example rent controls could be a well-intentioned but disastrous blow to the industry. However, more of an immediate worry is the far more general risk of a power vacuum after an election barely three weeks away, the associated effect on the financial markets – and ultimately on mortgage rates.

‘In the meantime, we are still seeing strong interest in the finance to support more complex buy to let investments. Right now, houses in multiple occupation are particularly popular with landlords searching for a better rental yield – but today’s record low mortgage rates are proving of enormous benefit to all types of landlord.’[7]

 

[1-7] http://www.landlordexpert.co.uk/2015/05/07/uk-landlords-remortgage-at-twice-the-rate-of-new-purchases-2/

 

 

Landlords are Remortgaging Due to Record Low Rates

Published On: April 22, 2015 at 2:57 pm

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Mortgages for Business have found that landlords are remortgaging while buy-to-let rates remain at record lows.

In the first quarter (Q1) of 2015, 66% of mortgages for standard buy-to-let investments were remortgaging loans. The rest were new mortgages for purchases, the mortgage broker revealed.1

Managing Director of Mortgages for Business, David Whittaker, says: “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; it represents a charge by landlords to make the most of an unprecedented economic situation.”

The best two-year fixed-rate remortgage deal in this market is 75% loan-to-value (LTV) at 2.5% with a £2,495 fee. In April last year, the best buy rate was 2.99% with a 2.75% fee.1

Landlords are Remortgaging Due to Record Low Rates

Landlords are Remortgaging Due to Record Low Rates

For five-year fixes, the best remortgage deal is a 3.95% rate with a £1,995 fee. 12 months ago was a 4.95% rate with a slightly lower £1,495 fee.1

In Q4 2014, remortgaging made up just 62% of buy-to-let activity. Mortgages for Business states the rise is due to more competitive remortgage deals from specialist lenders.1

As more landlords remortgage, average LTV ratios have increased slightly in the last three months. The average LTV is now 66% compared to 63% in Q4 2014.1

Returns have also grown marginally, from 6.3% to 6.4%.1

Whittaker continues: “Landlords are reporting a buoyant rental market, driven in large part by a resurgent jobs market and now even more encouraging signs on wages.

“In turn, this will stimulate many landlords to invest further, although one major hold-up in an otherwise sunny outlook is a long shadow of political uncertainty.”

Last week, we found that landlords have experienced huge returns of 1,400% in the last 18 years. Find out more here: /1400-returns-create-buy-let-landlords/

Mortgages for Business has also revealed that remortgaging on Houses in Multiple Occupation (HMOs) has reached a higher proportion at 73%, from 70% in Q4 2014.1

Yields on HMOs have also risen considerably to 10.4% from 9%, making them the best type of investment.1

Remortgaging on multi-unit freehold blocks represented a huge 89% of all mortgage activity; up from 42% in Q4 2014.1 Multi-unit freehold blocks are typically purpose built blocks of flats or houses converted into flats.

However, returns on these investments was down to 6.3% from 9.3%.1

Whittaker concludes: “We are still seeing strong interest in the finance to support more complex buy-to-let investments.

“Right now, HMOs are particularly popular with landlords searching for a better rental yield, but today’s record low mortgage rates are proving of enormous benefit to all types of landlord.”1

1 http://www.thisismoney.co.uk/money/buytolet/article-3040216/Landlords-race-remortgage-advantage-record-low-buy-let-rates-amid-political-uncertainty.html

 

Year on Year rise in Buy to Let Mortgages

Published On: April 20, 2015 at 10:21 am

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Categories: Landlord News

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Latest figures have shown that buy-to-let mortgages rose steadily in the twelve months from February last year.

Rise

Statistics from the Council of Mortgage Lenders have revealed that 15,900 buy to let loans were taken out in February. Despite this figure being down 13% from January, this signaled an 11% rise from February 2014.[1]

 

These loans totalled £2.2 billion, down 12% from January but up 16% from February last year. Buy-to-let remortgaging followed a similar pattern, falling 19% from January, to 8,400. However, this was a substantial increase of 23% from twelve months ago.[2]

 

Overall value of these loans amounted to £1.3bn, a very large increase of 31% year-on-year.[3]

Year on Year rise in Buy to Let Mortgages

Year on Year rise in Buy to Let Mortgages

 

Paul Smee, director general of the Council of Mortgage Lenders, said that the rise in buy-to-let activity was due, ‘almost completely to remortgaging which is typically strong in the buy-to-let market.’[4]

[1-4] http://www.landlordtoday.co.uk/news_features/Buy-to-let-mortgages%3A-steady-rise-year-on-year