A surge in buy to let remortgaging activity in June has been put down to ‘savvy landlords’ capitalising on record low interest rates.
The Council of Mortgage Lenders (CML) has revealed that remortgaging activity rocketed by a third which was fuelled by fears that the Bank of England was due to raise the base interest rate.
A director of TMA Mortgage Club, David Copland, said: “It’s a sure sign of savvy buy to let investors who are capitalising on record low interest rates.”
Another reason for the rise in activity is the growing number of financial experts who are warning borrowers to consider their loan options before the interest rate rises.
According to the CML, buy to let investors received 11,500 loans which is 30% more than were handed out in May. That’s also 53% more loans than were granted in June last year.
Value of buy to let remortgages rockets
The value of the loans has grown too by 29% in the month to £1.8 billion. The figure for the year on year increase is a huge 63.6%.
Buy to let lending is continuing to grow this year, the second quarter was particularly busy for mortgage activity, particularly for remortgages.
The number of buy to let loans in the second quarter amounted to 58,000 which are worth £8.8 billion.
That’s an 11% rise on the first quarter’s numbers and a 12.8% rise in values.
The figures from CML also highlight the fact that buy to let lending is now outstripping that for house purchases.
The CML’s director, Paul Smee, said: “People are realising a rate rise is not just a theoretical possibility but a realistic prospect.
“After the slow start to the year, lending is now picking up as we expected.”
There appears to be a growing trend in new landlords taking out mortgages but established landlords are also looking to remortgage to help expand their portfolio.
However, the biggest trend and one that the market will be looking forward to more of, is that first-time buyers have come back to the market to help push overall lending up by 22% in June.
Tenancy deposits not being reclaimed
Meanwhile, the deposit protection service (DPS) has revealed that a small number of tenancy deposits are not being reclaimed.
In two years, 0.2% of deposit money lodged with them in England and Wales, has been unclaimed.
The DPS’ managing director, Julian Foster, said: “There is no deadline for tenancy deposits to be claimed and we look after funds indefinitely and will respond to any claim to repay the money in days.”
