Capital raising drives UK BTL remortgage market.

Buy-to-let remortgaging in the UK is being driven by landlords raising capital to fund portfolio expansion, research from Paragon Mortgages has revealed.

Paragon’s intermediary survey showed capital raising was the number one reason for landlords remortgaging during the second quarter of 2011.

On average 47% of buy-to-let remortgages handled by intermediaries surveyed were for the purpose of raising capital, whilst 35% were to achieve a better rate of interest.
Other reasons for remortgaging included landlords’ existing lenders actively encouraging remortgaging and dissatisfaction with an existing lender.
Remortgaging hit its highest level since the final quarter of 2008 during the second quarter according to figures from the Council of Mortgage Lenders.
The £1.86bn advanced for remortgage purposes represented 53% of the total £3.5bn buy-to-let lending for the period.

John Heron, managing director of Paragon Mortgages, said: “Approximately two thirds of properties in the private rented sector have no mortgage whilst the average loan to value on those properties with a mortgage is 48% so there is a huge amount of equity in the sector that landlords are looking to utilise to help fund portfolio growth.

“CML figures show there was a significant increase in buy-to-let remortgage cases between the first and second quarters of this year and it appears a large proportion of that is from landlords releasing equity to generate seed capital for portfolio expansion.

“In a market characterised by high rental demand, we could see this becoming more commonplace.”