Hamptons data shows that buy-to-let purchases increased from 15.41 per cent of all Hamptons mortgage business in August 2006 to 21.88 per cent in September, an increase of nearly 7 per cent. End of quarter incentives from property developers was a likely explanation for this jump, as was seen at the end of June.
Hamptons prediction of landlords’ confidence in the property market is further demonstrated as many remortgage their own homes in order to release equity for purchases and to take advantage of developer deals. Home remortgage cases increased by 7 per cent in the last month from 18 per cent to 25 per cent and buy-to-let remortgages fell slightly from 19.92 per cent to 12.50 per cent (-7.42 per cent).
At the same time, the average loan-to-value (LTV) on buy-to-let remortgages has increased by 13 per cent on last month’s figures and now stands at 75.35 per cent (August 62.01 per cent, September 75.35 per cent), perhaps also indicating that confident landlord’s are remortgaging against their existing portfolio to buy more property.
Meanwhile, Hamptons reported that home purchase mortgages fell slightly from 44.74 per cent in August to 40.63 per cent in September, bucking the usual upward trend expected at the beginning of autumn. The Base Rate rise in August could be a factor in this apparent slowdown, with individual home buyers shying away from the market in a time of uncertainty. With another Base Rate rise widely expected before the end of the year it will be interesting to track what effect this has on home purchases going forward.
Jonathan Cornell, technical director at Hamptons International Mortgages, commented: “While the Base Rate rise appears to have put the brakes on home purchases, buy-to-let investors are still showing their faith in the property market. Many are literally putting their money where their mouth is and remortgaging their own home to extend their property portfolios.
“The temptation is further increased by the plethora of 'going, going, gone' offers from developers anxious to boost cashflow at the end of the quarter. Investors new and old appear to be snapping up these deals, ensuring that house prices remain buoyant.”
