Record low mortgage rates are driving buy-to-let landlords to remortgage, according to new data from Mortgages for Business’s Complex Buy-to-Let Index. In the first quarter of 2015, 66% of mortgages for vanilla buy-to-let properties were remortgaging loans, while 34% were for new purchases.
This is an increase of 4% from the final quarter of 2014.
Competition between specialist lenders has led to a slashing of rates. The best two-year fixed rate remortgage deal with a 75% loan-to-value has fallen 0.49% since April 2014, to just 2.5%.
The proportion of remortgaging for houses in multiple occupation was even higher, standing at 73%, up from 70% in in the last quarter of 2014. But it was found to be highest for multi-unit freehold blocks, where remortgaging represents 89% of buy-to-let mortgage activity, compared to just 42% in the previous quarter.
David Whittaker, managing director of Mortgages for Business, said: “A great deal agreed last year may be uncompetitive by today’s standards. So this stampede is completely rational, as it represents a charge by landlords to make the most of an unprecedented economic situation.”
The findings also showed that rental yields have remained solid, with gross yields now averaging 6.4%, up to 6.3%, as tenants’ finances slowly but steadily improve.