Buy to Let Lending Increases.

by Mark Johnston

Buy to Let Lending Increases.

Data shows that buy to let lending has been far and away the strongest sector of the mortgage market since overall lending bottomed-out in 2010.

It seems that the buy to let industry is experiencing something of a resurgence in 2013. Lower house prices, rising rental prices and more competitive mortgage deals are proving tempting to prospective landlords; particularly first-time landlords.

According to recent figures from buy to let mortgage lender Paragon show that 22 per cent of recent buy to let business was from first time landlords, thus meaning that more individuals and families are investing in buy to let property.

John Heron, director of mortgages at Paragon, a buy to let mortgage lender, says “We are continuing to see growth in the buy to let market as demand from landlords increases, tenant demand remains strong and levels of optimism stay high.”

David Whittaker, managing director of Mortgages for Business, a specialist buy to let mortgage broker, said “The flow of first time buyers is still barely a trickle, which is sending the excess demand directly into the rental sector and keeping yields high for buy to let investors.”

Some industry experts feel that at the moment the market is still skewed towards the buy to let landlord.

According to the Council of Mortgage Lenders (CML) but to let landlords were granted £4.2 billion across 33,500 new mortgage loans in the first quarter of this year.

By then end of March 2013 buy to let mortgages accounted for 13.4 per cent of total mortgage lending within the UK.

However, almost half of this gross borrowing was for remortgaging, rather than new acquisitions.

Recent research has revealed that buy to let mortgage applications have soared by 26 per cent in the past year as landlords seek to take advantage of the “perfect conditions” which have been created by low interest rates and state subsidised lending.

Ray Boulger, senior technical manager at John Charcol, a mortgage broker adds: “Confidence in the buy to let market appears to be gaining more traction as a result of ongoing falls in mortgage rates coupled with steady or increasing rental values.”

It appears then that the funding for lending scheme, has helped the buy to let sector by loosening the supply of credit to lenders who are then passing the savings on to investors.

Danny Gabay, a director of Fathom Consulting, has recently claimed that the funding for lending scheme is contributing to growth in “the buy-to-let sector at the expense of first time buyers”.

Therefore with so many low mortgage rates on offer at the moment it is no wonder that buy to let remains a tempting option to investors. However, it is important to remember that there are no guarantees when it comes to buy to let.

It is worth remembering that investing in property can be in some ways riskier than investing in shares as consumers can not simply sell up and walk away whenever they wish too.


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