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Landlords Seek Better Rates by Remortgaging
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
There may not be as many new landlords entering the buy-to-let market as expected, according to recent data from mortgage lenders.
Landlords Seek Better Rates by Remortgaging
Despite £2.5 billion being lent to property investors in May, over half of this – £1.4 billion – was for remortgaging rather than purchasing new property.
Research from buy-to-let bank and building society trade body, the Council of Mortgage Lenders (CML), found that borrowing for buying residential investment property was up 8% from April and 10% annually.
The figures for remortgaging reveal that lending to landlords was up 27% compared to May 2014 and the same as in April 2015.
Overall, lenders approved 17,500 mortgages, 8,400 of which funded new buy-to-let purchases and 8,900 refinanced existing borrowers.
The CML states that the data uncovers a trend of landlords refinancing since the start of this year, mirroring the fact that mortgage rate increases are imminent and therefore investors are seeking lower fixed rates.
Director General of the CML, Paul Smee, says: “House purchase lending in May was slightly up on the previous month, suggesting the market might be waking up after a subdued first quarter.
“Activity has broadly been down on last year, but we expect it to rise in the summer months, as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable.
“But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings, which will work in a contrary direction.”1
Additionally, the CML is changing its rules regarding buildings insurance cover on buy-to-let purchases and remortgages.
Lawyers arranging a property conveyance must ensure that borrowers have buildings insurance in place at completion of the mortgage and should inform property owners that they must maintain the cover throughout the mortgage term.
1 http://www.totallandlordinsurance.co.uk/news/chase-for-rates-leads-landlords-to-remortgage/
