Two thirds of new buy-to-let loans are for remortgages as landlords rush to take advantage of record low mortgage rates.
The trend is even clearer for more complex property types, with remortgaging now accounting for 73% of new loans on houses of multiple occupation (HMO).
LTVs have arisen across all property types as landlords leverage their portfolios, according to the latest Mortgages for Business Complex Buy to Let Index.
In the first quarter of 2015, 66% of mortgages against standard or vanilla' buy to let property were remortgaging loans, against just 34% for the purposes of purchasing new properties.
Remortgaging represented 62% of vanilla buy-to-let mortgages as little as three months ago, in Q4 2014.
And it represented 89% of mortgages for multi-unit freehold blocks in Q1, compared to just 42% in the final quarter of 2014.
Semi-commercial property witnessed the same trend but with a more gradual change, from 86% to 87% of new loans agreed for remortgaging.
Average LTVs have crept slightly higher over the course of the last three months. For vanilla' buy-to-let, the average LTV now stands at 66% in Q1 2015, compared to 63% in Q4 2014.
Landlords of HMOs have seen LTVs ratios rise to 70%, up from an average of 64% LTV in Q4 2014.
David Whittaker managing director of Mortgages for Business, comments: "Record low mortgage rates are driving wave upon wave of landlords to reassess their finances. A great deal agreed last year may be uncompetitive by today's standards.
"So this stampede is completely rational, it represents a charge by landlords to make the most of an unprecedented economic situation.
"Remortgaging is often done for the purposes of raising extra capital, and this is clearly reflected in higher loan to value ratios. However, this is by no means an unwelcome trend and could in turn open the door to more new purchases and investment by landlords.
"Rental yields are healthy and there is a gathering demand from an increasingly prosperous base of tenants. So the fundamentals of the rental market, and of landlords' finances, are still extremely solid."
The research also showed rental yields rising to 6.4% for standard buy-to-let properties, while HMO yields broke through 10%.
Comments