The third quarter of 2016 saw the average number of buy-to-let mortgage products available in the market fall for the first time since the same period in 2013, although product numbers still remain in the thousands, according to Mortgages for Business’s latest Complex Buy to Let Index.
Remortgages yet again outstripped purchases in all categories. While rates remain low this trend is expected to continue, as ‘savvy’ landlords continue to remortgage at the end of their initial product terms to avoid reverting onto their lender’s standard reversion rate.
David Whittaker (pictured), managing director of Mortgages for Business, said: “Although product numbers have fallen slightly there is still in excess of 1,000 products out there – plenty of choice for landlords. I imagine product numbers will remain fairly stable for the next 12 months, at least until we see some new lenders enter the market.
“Remortgages continuing to outstrip purchases is no surprise.”
Over the five years since the index was launched, there has been very little change in the average loan to value from quarter to quarter, the average being 67% across all property types despite a mixed bag of changes in average property values and loan amounts.
For vanilla buy-to-lets, average property values and loans amounts continue their gentle rise in proportion with each other, whilst the reverse can be said for HMOs and multi-units which have both seen the average loan size decrease in the last five years.
Whittaker added: “I can see two main reasons for this reduction in loan amount one of which being that smaller, less expensive HMOs and multi-units are being financed in areas of higher property prices. The second reason is that in areas of the country where property prices remain low, there has been an increase in purchases and subsequently refinancing of HMOs and multi-units.
“I’ve no doubt this increase in HMO and multi-unit purchases comes down to the growing demand for smaller, less expensive rental accommodation accompanied by the higher yields they tend to produce.”