Buy to let review
As Generation Rent fails to “get old”, the buy to let market has continued to both recover and, in fact, grow. Buy to let loans now account for one in every eight mortgages – the highest proportion ever recorded.
Almost £12billion worth of buy to let mortgages were agreed throughout the first nine months of 2012, a year-on-year increase of 19 per cent. Activity in the third quarter of the year – July, August and September – increased 8 per cent to £4.2bn compared to the £3.9bn in April, May and June.
The industry has also been boosted by increased levels of competition; new lenders emerged while others returned, perhaps most notably Kensington Mortgages who marked its buy to let revival by launching five new products between 70 and 80 per cent loan to value (LTV).
In recent months a number of lenders including Aldermore, The Cambridge, BM Solutions and Barclays have cut their buy to let rates while others, including Skipton Building Society and Paragon, have launched new products and services.
Q3 stats also showed an average increase in LTVs while average fixed rates dropped from 5.06 per cent to 4.88 per cent. Landlords however still favour variable rates – 60/40 – despite the average SVR increasing 4.10 per cent to 4.40 per cent.
Brokers have also seen greater improvement in buy to let mortgage availability; a third reported that, during Q3, buy to let mortgages were easier to obtain than at any point previously in the year.
The industry still has some way to go to reach its previous lofty, pre-recession heights; despite an influx of lenders, demand continues to outweigh supply particularly for landlords who fall outside a vanilla buy to let. Funding options for professional landlords with large portfolios and those looking to purchase houses in multiple occupation (HMOs) remain limited.
Nevertheless, while innovation is still required, we can all take some much needed solace from the buy to let market. In true tortoise-and-hare-style, it continues to move in the right direction slowly, but steadily.
Content correct at time of publication