Report says more landlords are re-mortgaging

Landlords are re-mortgaging to take advantage of the widest range of products in recent years and to prepare for expected interest rate hikes. 

The Mortgages for Business buy to let index shows that the number of buy to let mortgages has now reached 586, giving UK landlords 65 more than just three months ago.

In the first quarter of 2014, 65 per cent of buy to let mortgage transactions were re-mortgages rather than new purchases. 

A full three quarters of transactions against houses in multiple occupation (HMOs) were re-mortgages compared to 71 per cent in the previous quarter and 69 per cent a year ago. Meanwhile re-mortgages made up 81 per cent of transactions involving larger, multi-unit freehold blocks, up sharply from 69 per cent last quarter and even higher than the 75 per cent a year ago.

Mortgages for Business says gross yields have risen on buy to let properties to stand at 6.4 per cent on average. However, houses in multiple occupation still command by far the greatest yields: gross yields on the average HMO are now 9.6 per cent, down slightly from 10.4 per cent late last year but still significantly higher than other property types.

“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.