According to the forecast, 63% of landlords are finding no use for increased LTV limits and prefer to keep their borrowing to 85% of the property value or below. In line with this, 94% of all intermediaries questioned are not actively recommending LTVs in excess of the more normal levels.
Furthermore, buy-to-let intermediaries are now predicting that remortgaging will form a larger part of their business in the next three months. They raised their predictions for the proportion of remortgage business from 40% in March, to 43% in April.
This indicates that even though they are actively remortgaging their current properties, today’s buy-to-let investors take an extremely pragmatic approach to debt and are not swayed by the opportunity for higher gearing. And with only 6% of intermediaries recommending that their clients borrow beyond normal levels it doesn’t appear that there is an appetite among the intermediary community for encouraging increased debt either.
Changing perceptions of interest rates are also contributing to canny investors ensuring they are not over exposed to debt. In March, 22% of intermediaries expected interest rates to rise by 0.25% over the following three months, a figure that has risen over the last month to 30%. Currently 53% expect rates to remain the same, down from 57% in March.
Nicola Severn, Marketing Manager at Mortgage Trust commented: "Although increased LTV limits may have secured a lot of publicity, these increases, in some cases way beyond 85%, are aiming at a very thin market. Buy-to-let landlords operating in today’s market are cautious investors who believe in responsible borrowing. They have little desire to mortgage themselves above modest levels, and at 77%, Mortgage Trust’s average completion loan to value thoroughly supports this. They are eager to position themselves so that they are able to adapt easily to a changing market and protect themselves against the potential of higher interest rates. For the first time we have seen the proportion of business expected from remortgaging exceed that expected from loans to experienced investors adding to portfolios. This trend often goes hand in hand with releasing equity for further investment, but also demonstrates how landlords manage their finances actively to maximize the return on their investments over the long term."
