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BTL gross lending in 2022 – sizing your remortgage opportunity
A combination of factors impacting landlords, the private rental sector and the buy-to-let market have recently been influencing activity levels, specifically remortgage business.
2022 kicked off with many suggesting the subsequent 12 months would be the ‘year of the remortgage’ and while purchasing has clearly held its own, as we move through the current environment – with Base Rate rises, increased inflation, and the like – that definition appears to be solidifying.
The recent monthly data from UK Finance shows the trend of the buy-to-let market has been helped substantially by remortgage activity.
Buy-to-let gross lending hit £4.9bn in May this year, up from £4.3bn the previous month, and the largest month since June 2021 when the country was still benefiting from the stamp duty holiday, very low rates and the catalyst that this provided to activity levels.
Buy-to-let remortgage transactions were the key driver for May’s figures, hitting £3.4bn, with purchases at £1.4bn. It is rare to see remortgaging breach the £3bn monthly barrier, however this has happened twice in the last three months and the figures show that the total share of lending taken by buy-to-let business increased from 18.1% in April to 18.8% in May 2022.
Understandably, it would seem that landlords are absolutely aware of the direction in which rates are travelling and have increasingly wanted to remortgage existing finance in order to find a fresh home which gives them stability of monthly payment over a longer period of time.
Five-year fixes have been particularly popular in recent months, and with various members of the MPC talking about future Bank Base Rate increases, even though there tends to be little read-across to buy-to-let product rates, landlords will need to take notice of these messages.
Swap rates also determine the level of pricing put out by wholesale-funded lenders like Foundation. It remains to be seen whether this trend continues, but from an adviser/client point of view, this might well be a time to look at what is on offer and determine whether now is the time to switch.
Look at our Buy-to-Let calculator here
We know there is a large tranche of buy-to-let mortgages coming up for maturity throughout almost the entirety of this year, and coupled with the catalyst provided by other economic factors, we sense this will remain a ripe market for remortgage business.
It’s uncertain how long this will continue for, the wider economic pressures may begin to force a slow-down in activity. However, tenant demand does not appear to be falling back with high employment levels, and with PRS supply still being constrained, rents have continued to rise.
Plus, over the last few years, house values have increased significantly in some UK regions. Landlords can access increased equity in their existing properties in order to fund future deposits for more purchases, providing they can access the limited supply of properties available to buy.
It seems it will be a slow approach in terms of how the economy will play out, but at Foundation we feel strongly that the buy-to-let market will provide plenty of remortgage opportunities for advisers.
If you, and your clients, can find a lender that is working to a strong service capability, we are currently at one-day service levels - then you should be able to meet client demands, satisfy their financial needs, and help them continue to build their portfolios.
FOR INTERMEDIARIES ONLY
*This article was originally published on Mortgage Solutions
