Remortgaging increased as proportion of transactions on all property types other than vanilla in the second quarter of 2013, according to the latest Mortgages for Business Complex Buy to Let Index.
The firm said that Funding for Lending has improved buy to let mortgage availability, reducing rates and encouraging lenders to ease criteria. Despite the number of lenders remaining steady at 27, the number of deals on offer increased to 465, some 31 more than in the first quarter of the year.
‘Buy to let mortgages are at their most affordable since the downturn. Lenders have gratefully accepted the help on offer from FLS and have passed some of the savings on to investors in the form of lower rates and a wider choice of mortgages,’ said David Whittaker, managing director of Mortgages for Business.
‘This has encouraged a record proportion of refinancing with landlords taking advantage of cheaper remortgage deals in order to expand their portfolios further down the line. Yields have fallen slightly on most property types but are still strong. And they look set to remain that way. The demand for rented accommodation is still astronomically high, despite a slight improvement in first time buyer numbers,’ he added.
Semi commercial property (SCP) saw the biggest increase, with remortgages accounting for nine in every ten transactions in the second quarter, a sharp increase from just 54% the previous quarter.
Refinancing accounted for 88% of all Multi-unit Freehold Block (MUFB) deals, up from 75% in the first quarter. Similarly, 84% of total Houses in Multiple Occupation (HMO) deals were remortgages, rising from 69%.
Vanilla was the only property type where remortgaging fell as a proportion of transactions, although it still accounted for almost two-thirds of deals. Refinancing accounted for 65% of all vanilla transactions in the second quarter, down slightly from 69% in the first quarter.
The combination of increasing property prices and an increase in first time buyer numbers contributed to a slight fall in gross yields on vanilla property, falling from 6.4% in the first quarter to 6.1% in the second quarter. However, LTVs and gross yields remained strong despite increasing property values and loan amounts.
MUFB gross yields dropped more sharply, falling from 7.7% to 6.4% between the first and second quarters. And the gross yield on HMO fell below 10% for the first time in 12 months, dropping from 10.5% in the first quarter to 9.5% in the second quarter.
Yields on SCP increased sharply from 8.2% in the first quarter to 11.4%. Investors purchased more expensive SCP in the second quarter with a higher number of transactions involving high value, high yielding properties than normally seen. LTVs increased marginally to 65%.