It’s something of a shame that some are wanting to shape the debate in terms of a ‘first-time buyer versus landlord’ argument, especially when it seems the landlords (and those lenders servicing them) are being cast in the role of ‘bad guys’, pricing homeowners out of the market.
The perception that there is an uneven playing field in the housing market strikes a chord with a certain demographic and, at a time when the over-riding issue is one of housing supply, it seems handy to have a scapegoat readily available.
Overall, the buy-to-let market is a growth and success story, and it’s clear to see the ongoing demand from both new and existing landlords. Precise Mortgages recently estimated the buy-to-let sector would hit the £30bn gross lending mark during 2015 and there seems little to suggest this won’t be the case. The most recent figures from the Council of Mortgage Lenders for June this year recently revealed that gross buy-to-let lending was £3.4bn – up 54.5% on the same month in 2014 and 25.9% up on the previous month. That consistency and growth of appetite and activity could see the £30bn mark breached by year end.
What has also been particularly interesting is the strength in buy-to-let remortgage activity – especially when you consider it against residential remortgaging which has remained relatively subdued for some time. Precise again believe 50% of that £30bn buy-to-let lending will be remortgaging which is clearly a sizeable chunk and shows a clear commitment from buy-to-let borrowers to actively refinance and to tap into the growing lender appetite in this area. New lenders entering the market, and existing ones upping the ante, have made the buy-to-let remortgage market far more competitive than just 12 months ago.
However, one can also appreciate that large numbers of buy-to-let borrowers are currently sitting on rather attractive rates which they do not wish to give up easily. At the same time, they also want to extract any recent increases in capital value and invest that back into their portfolio. It’s something of a dilemma; however the answer could lie with today’s highly competitive buy-to-let second-charge market which has recently seen rates fall from a less than tempting 9% down to an incredibly attractive 5.79%.
For prime landlords who want to embark on a capital-raising exercise but not put their existing buy-to-let rate in jeopardy through a straight remortgage, it may make sense to use a second-charge option instead. In that way, the capital is released to reinvest via an attractive loan rate and the existing first-charge mortgage pricing is left on the same terms.
Advisers who are seeing a growing number of landlords wanting to expand their portfolios may find this is the perfect opportunity to take advantage of the second-charge option rather than simply going down the remortgage route. For those advisers not as up to date with the buy-to-let second-charge market as they might wish to be, there is always the opportunity to introduce to a specialist finance broker like ourselves.
We will find the right loan at the right price, whilst also ensuring all regulatory requirements are met. The client will receive a great experience and go away with an appropriate product for their circumstances and needs. At the end of the day, the client is looked after and has that all-important finance which will enable them to develop their investments fully. It’s therefore in everyone’s interests not to overlook second charge buy-to-let mortgages.
