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Buy to Let finance. More readily available than ever?

Wednesday, April 23, 2014 Posted in: Landlords

A survey conducted by Paragon Mortgages has revealed that landlords perceive buy to let finance being more readily available than ever. Key findings show:

- In Q4 2013 42% of 200 landlords asked thought finance was readily available.

- In Q1 of 2014 we saw this percentage rise to 44%. This is the highest rate that has been seen since the question was first asked in 2010.

- The lowest level ever seen was in Q1 of 2011 when only 17% of landlords thought finance was readily available.

John Heron, managing director of Paragon Mortgages, said: “The availability of buy-to-let finance is vital to a healthy and competitive private rented sector.

“As the market has recovered we have seen the general improvement in confidence reflected in how landlords are feeling about the availability of buy-to-let finance. Just to put this in further context, Moneyfacts data shows that at the lowest point there were less than 200 products available however; the latest figures show that there are now more than 500. As we progress through 2014 I believe we will continue to see further growth in the private rented sector, greater confidence in buy-to-let lending and more innovation from buy-to-let lenders.”

With buy to let finance being more readily available, we can only assume that this is one of the reasons why landlords are now taking advantage of the widest range of mortgage products in years. In Q1 of 2014 65% of buy to let mortgage transactions were for landlords re-mortgaging rather than new purchases. This is hardly surprising as we have seen 65 different mortgage products come onto the market within the past 3 months.

Three quarters of transactions against HMOs were re-mortgages compared to 71% in the previous quarter and 69% a year ago. Meanwhile re-mortgages made up 81% of transactions involving larger, multi-unit freehold blocks, up sharply from 69% last quarter and even higher than the 75% a year ago.

“Landlords know that exceptionally low interest rates can’t last forever. But now they need to act on that instinct. The Bank of England will almost certainly raise interest rates before the general election. Switching to a five year fixed-rate deal is important while these remain so affordable” says Mortgages for Business spokesman David Whittaker.

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