The improvement in buy to let mortgage availability and affordability, aided by Funding for Lending, has encouraged more property investors to refinance in order to make purchases later in the year. Despite the number of lenders remaining steady at 27, the number of deals on offer increased to 465 – 31 more than in Q1.
Remortgaging increased as a proportion of transactions on all property types other than vanilla during the second quarter. Semi-commercial property (SCP) saw the biggest increase, with remortgages accounting for nine in every ten transactions in Q2, a sharp increase from just 54% in Q1.
Refinancing accounted for 88% of all Multi-unit Freehold Block deals, up from 75% in Q1. Similarly, 84% of total Houses in Multiple Occupation deals were remortgages, rising from 69%.
Vanilla was the only property type where remortgaging fell as a proportion of transactions, although it still accounted for almost two-thirds of deals. Refinancing accounted for 65% of all vanilla transactions in Q2, down slightly from 69% in Q1.
David Whittaker, managing director of Mortgages for Business, commented:
“Buy to let mortgages are at their most affordable since the downturn. Lenders have gratefully accepted the help on offer from FLS and have passed some of the savings on to investors in the form of lower rates and a wider choice of mortgages. This has encouraged a record proportion of refinancing; with landlords taking advantage of cheaper remortgage deals in order to expand their portfolios further down the line. Yields have fallen slightly on most property types but are still strong. And they look set to remain that way. The demand for rented accommodation is still astronomically high, despite a slight improvement in first-time buyer numbers."
