Buy-to-let lending returned to some form of normality during the fourth quarter of 2016, according to fresh lending figures.
The share of lending for acquisitions in the buy-to-let market rose from 28% in the third quarter to 38% in the fourth, which was comparable with the 38% recorded in the second quarter, the latest Mortgages for Business’ complex buy-to-let index found.
Remortgaging continued to account for the bulk of buy-to-let activity in Q4, while HMO buy-to-let lending rose to 26%, up from 23% in Q3.
David Whittaker, CEO of Mortgages for Business, said: “It is encouraging to see that the share of lending for purchase in the buy to let mortgage market returned to normal in Q4 2016.
“Following a notable shift towards lending for remortgage in the third quarter, landlords showed they were once again willing to commit to new purchases.
“The outcome of the EU Referendum, and the subsequent macro-economic uncertainty dampened purchase lending in Q3, with many landlords initially opting for a cautious approach.
“While changes to stamp duty on second properties and landlords’ tax relief mean that landlords need to approach their investments intelligently, there are still excellent returns to be had in the market – especially compared to other asset classes.”
The index also found that the average loan to value ratios across all products remained stable at 67% in the final quarter of 2016, while there was an increase in average property value and loan sizes in the multi-unit block mortgage market, as 30% of applications involved properties worth in excess of £1m in Q4.
Whittaker added: “There is clearly an appetite among investors for more valuable multi-unit blocks, with the lending share of million-pound plus blocks from growing under a fifth in Q3 to almost a third in Q4.”