It’s no secret just how active the buy-to-let (BTL) sector has been from a purchase perspective over the past two years.
Whilst demand remains strong from portfolio landlords who continue to take advantage of some favourable lending conditions, the potential attached to an increasingly buoyant remortgage market is also evident.
With this in mind, let’s evaluate some data to help establish this potential. Back in February, a webinar poll conducted by CHL Mortgages – held in conjunction with Knowledge Bank based on the specialist BTL lending marketplace – found that 70 per cent of portfolio landlords are expected to remortgage or consolidate loans over the next 12 months.
When breaking this down, almost half (48 per cent) of broker respondents thought that one to five of their portfolio landlord clients would remortgage or consolidate loans in 2022. Interestingly, 12 per cent highlighted that 20+ of their portfolio landlords clients are likely to remortgage or consolidate loans over the next 12 months.
When operating in a highly dynamic marketplace, it’s important to maintain some kind of barometer when it comes to the current actions of landlords and the motivations behind them. This is one of the main reasons why we recently commissioned a survey with online broker forum cherryplc.co.uk to help form a better understanding of the current BTL remortgage market.
This survey generated some enlightening insights including the fact that – despite impending legislation which could see all newly rented properties require an EPC rating of C or above from 2025 – none of the landlords surveyed were in the process of remortgaging with the intention of raising funds to improve EPC ratings on their properties.
From a purchase perspective, it was encouraging to see that 21 per cent of broker respondents suggested that their landlord clients were looking to raise funds to purchase new properties. 70 per cent were looking to remortgage due to their fixed rate product coming to an end. In addition, six per cent said that landlords were remortgaging due to reduced yields, with three per cent looking to raise funds to convert properties into houses in multiple occupation (HMOs).
Preparing for rising rates
I appreciate that this is a lot to digest but gaining a more in-depth understanding of the wants and needs of landlords, and of their tenants, is a must for advisers when it comes to being in a position to offer greater levels of holistic advice and provide real value. Value which is ever more apparent in light of rising interest rates.
We’ve just seen the Bank of England base rate rise to one per cent from 0.75 per cent, its highest level since 2009 and the fourth consecutive increase since December.
The impact on mortgage rates became evident in the following days and weeks as lenders aligned their pricing accordingly. This means time is of the essence for those landlords who are in a position to remortgage part or all of their portfolios before the next potential increase.
And the ball still lies firmly in the court of proactive advisers when it comes to helping their landlord clients make the most of these remortgage opportunities in what remains a highly competitive lending landscape.
Andy Valvona, national account manager at CHL Mortgages