Buy to let landlords are realigning their property finances rather than purchasing more homes for their portfolios.
The latest buy to let mortgage figures show borrowing increased as 32,000 loans worth £3.5 billion were agreed with lenders in the three months ending June 30 – but two thirds of the business was remortgaging.
The Council of Mortgage Lenders (CML) said landlord loans were up 21% on lending in the first three months of the year and hit the highest level since the end of 2008.
Remortgaging, mainly as landlords switched deals at the end of discount or fixed rate terms, made up a large slice of lending activity in the second quarter.
Lenders agreed 15,230 refinance loans worth £1.6 billion – up 27% on the first quarter and accounting for 53% of the total gross buy-to-let lending in the second quarter.
At the end of June, the buy to let market stood at 1.34 million mortgages worth £154.5 billion – up from 1.26 million loans worth £148.8 billion compared with 12 months earlier.
The CML pointed out that the latest increase is significant; the market is running at around one third of the levels seen at the peak of lending in 2007.
CML director general Paul Smee said: “If you consider the buy-to-let recovery alongside the increase in first-time buyer numbers, it appears that first-time buyers are not being displaced by buy-to-let landlords but are holding their own in a restricted market. So, this is encouraging news for those who want to rent, as long as it is realised that much of the current increase is for remortgage rather than house purchase.”
The CML has also released arrears and repossession figures for buy to let lending.
At the end of June, 28,100 or 2.09% of landlord mortgages were three months or more in arrears – lower than the arrears rates for owner-occupied homes of 2.59% for the first time since 2008.
Buy to let repossessions increased 9% from 1,700 in the first quarter, to 1,900 at the end of June.