Landlords raising capital to finance the expansion of their portfolios are behind a rise in buy-to-let remortgage activity, according to Paragon Mortgages.
Council of Mortgage Lenders data shows remortgaging accounted for more than two-thirds of a 21% increase in buy-to-let gross lending between Q1 and Q2, and Paragon says capital raising was the primary motivation for remortgaging.
Research by the lender shows that 47% of buy-to-let remortgages handled by brokers were for the purpose of raising capital in Q2, while 35% were to achieve a better rate of interest.
A further 8% cited customers’ existing lenders actively encouraging remortgaging and 7% mentioned dissatisfaction with an existing lender.
John Heron, managing director of Paragon, says: “Around two-thirds of properties in the private rental sector have no mortgage while the average LTV on properties with a mortgage is 48%, so there is a huge amount of equity in the sector that landlords are looking to use to fund portfolio growth.”