Business potential lies in maturing mortgages wave – Sedgwick

Recent Rightmove data reveals record asking prices for homes coming onto the market, up 1.4% since March and the first new monthly high in almost a year.

Meanwhile, mortgage rates have eased as swap markets priced in an anticipated base rate reduction of 0.5% next year, with further reductions to 3.75% forecast by year end. Such resilience should underpin landlord confidence as we enter a key period of remortgage activity in the buy-to-let (BTL) market.

UK Finance figures recently revealed how the final quarter of 2024 saw a resurgence in BTL activity, with £3.1bn in new BTL house purchase business, an increase of 58.9% compared to the same period in 2023.

A similar positive picture can be seen in remortgage activity, with a year-on-year increase of 41.7%, valuing £6.3bn, during the quarter.

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A remortgage opportunity 

Remortgaging is set to continue as a key source of business throughout the rest of 2025 because more than 190,000 fixed rate BTL loans reach the end of their term, representing around £26.2bn of borrowing.

With product switches excluded from this figure, the total number of landlords reviewing finance options is likely to be much higher. 

In addition to this typical remortgage activity, there is potential business to be found among the landlords who own some of the 60% of unmortgaged private rental sector (PRS) properties. Many of these homes will have seen significant appreciation since the pandemic, leaving landlords with substantial equity to draw down.

Last year, almost 17% of our BTL lending was secured against unencumbered properties, with a growing proportion of landlords taking advantage of the broader choice of products and better rates commonly available at lower loan-to-value (LTV) ratios. 

Releasing equity from wholly owned properties can support portfolio expansion, particularly given the continued strength of tenant demand. Others may choose to reinvest in their current stock, improving quality or energy efficiency to boost rental revenue potential and capital value with one eye on future regulatory requirements. 

Naturally, remortgage activity also includes those refinancing mortgaged properties. Here, brokers play a crucial role in navigating a market that has experienced significant rate fluctuations over recent years. 

This is especially relevant for landlords whose five-year fixes from 2020 are ending. While they benefitted from historically low rates, they’ll now be refinancing in a higher rate environment. A 33% increase in average rents since 2020 may help ease affordability pressures, but some borrowers may still face challenges. 

In such cases, product switches can be a useful tool, especially as they often do not require full re-underwriting. But with not all lenders offering this option, brokers are essential in helping landlords look beyond headline rates and fees to ensure the longer-term suitability of the products they’re choosing. 

It’s a straightforward concept but one some landlords may overlook, particularly those without borrowing in a more changeable market like we see today. It’s an example of how a future-focused relationship can deliver a tangible benefit for landlords today and in years to come.

This ultimately supports landlords to run successful lettings businesses while creating opportunities for repeat business.