Buy-to-Let: The silver lining of the remortgage black cloud
There is no denying that the current remortgage market is in dire straits. Even with the alluring rates lenders are dangling, homeowners are just not biting either through tactical choice or because their hands are tied by negative equity chains.
However, always one to describe the proverbial glass as half full rather than half empty, our attention turns to the buy to let market and its 21 per cent loan increase in Q2 which was largely driven by remortgaging.
According to data from the Council of Mortgage Lenders, Q2 saw 32,000 buy-to-let loans (worth £3.5bn) taken out, 65 per cent of which were remortgages. This is a 27 per cent increase on Q1.
The recovery of the buy-to-let market is a much needed boost to the dismal remortgage sector. However, this landlord-friendly market is only adding further misery to first time buyers.
With rental properties in high demand, rents have again increased month-on-month; August seeing the largest monthly increase this year (1.2 per cent). This places the average rent at £713 a month, up £8 from the previous record high of £705 in July.
Wales and the South East of England endured the biggest rise (2.1 per cent) with London (1.5 per cent) and the South-West (1.3 per cent) also seeing substantial increase. Average rents in the capital are now £1025 per month.
Commercial Director at LSL, David Brown, said:
“We are in the thick of the busiest time of year for the rental market, and red-hot demand for properties is driving rents up at their fastest monthly pace in the last 12 months.
“With significant improvement in the number of buyers able to secure a mortgage unlikely in the foreseeable future, competition for rental accommodation will not drop and further rent rises remain on the cards.”¹
¹Mortgage Strategy (Sep 2011)
Content correct at time of publication