Buy-to-let remortgaging 'on the rise'
Buy-to-let mortgaging is currently witnessing a growth in popularity, new research suggests.
According to data analysis from Paragon Mortgages, remortgaging for buy-to-let properties is experiencing growth, driven by landlords raising capital to fund expanding their portfolios.
Paragon Mortgages' intermediary survey revealed that raising capital was the principal reason cited by landlords for remortgaging during the second quarter, with almost five out of ten (47 per cent) of buy-to-let-remortgages having been carried out for this purpose.
Almost one in ten (eight per cent) respondents said they were driven to take out a remortgage because landlords' existing lenders were actively encouraging remortgaging, while seven per cent of respondents cited dissatisfaction with an existing lender.
John Heron, managing director at Paragon Mortgages, pointed out that approximately two-thirds of properties in the private rented sector currently have no mortgage, while the average loan-to-value on properties with a mortgage is 48 per cent, meaning there is a large amount of equity in the sector that landlords are using to help fund their portfolio expansion.
"Council of Mortgage Lenders figures show there was a significant increase in buy-to-let remortgage cases between the first and second quarters of this year and it appears a large proportion of that is from landlords releasing equity to generate seed capital for portfolio expansion," he said.
"In a market characterised by high rental demand, we could see this becoming more commonplace."
According to figures from the Council of Mortgage Lenders (CML), remortgaging accounted for more than two-thirds of the 21 per cent increase in buy-to-let gross advances between the first and second quarters.
The CML's figures also reveal that remortgaging hit its highest level since the final quarter of 2008 during the second quarter, with the £1.86 billion advanced for remortgage purposes representing 53 per cent of the total £3.5 billion buy-to-let lending for the period.
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