Finance News

BTL mortgage options rise to nearly 1,000

Em Morley - October 6, 2015

The number of buy-to-let mortgage products available soared to almost 1,000 during the third quarter of the year, according to a new report.

Data from the latest Complex Buy to Let Index from specialist brokers Mortgages for Business show that options for buy-to-let investors rose by 11% during the last three months.

Annually, there has been an increase of 35% in these products.

Yielding success?

‘Vanilla’ buy to let properties offer the lowest gross yield to landlords, with a further fall of 0.8% recorded in quarter three of this year to 5%. Annually, these yields have fallen by 0.9%.[1]

Moreover, between the second and three quarters of 2015, yields on multi-unit freehold blocks feel from 7.1% to 6.1%. Year-on-year, yields for this type of property have fallen by 2.5%.[1]

In comparison, HMO’s performed reasonably well, with yields only falling by just 0.1% in quarter three.

‘The number of new mortgages coming onto the market has rocketed in recent months,’ said David Whittaker. ‘There is huge interest in mortgages suitable for limited companies as landlords take advice from their accountants.’[1]

Continuing, Whittaker suggested that, ‘as rents fail to keep pace with racing property prices, yields are continuing to plateau. Returns on vanilla buy to let have now fallen to the 5% mark. Landlords will reasonable borrowing costs and a strong portfolio of these sorts of properties will still be making a solid income from such investments but this changes the case for those considering new purchases. With average yields on HMO’s still nearer 10%, more complex property types are likely to attract a growing portion of new investment.’[1]

BTL mortgage options rise to nearly 1,000

BTL mortgage options rise to nearly 1,000

Remortgaging rises

Further data from the report shows that remortgaging performed better than new purchase loans for the fourth consecutive quarter. During the third quarter of this year, 66% of vanilla buy to let loans were for remortgaging, in comparison to 34% for new property purchases. [1]

For multi-unit freehold blocks, remortgaging accounted for 89% of all new mortgages in the period, up by 7% month-on-month and by 22% on the same period one year ago.

Whittaker feels that there is, ‘a change of mood for landlords. Recent unfriendly noises from the Government and Bank of England have contributed but mostly this represents a natural cooling in the buy to let industry after an exceptionally strong first half of 2015.’[1]

‘Consolidation is the order of the day. Landlords are taking full advantage of record low borrowing rates while this lasts. The fact the landlords are choosing in vastly larger numbers to remortgage rental property rather than purchase shows they are looking to get a competitive fixed rate mortgage,’ he added.[1]

[1] http://www.propertywire.com/news/europe/uk-landlords-buy-let-2015100611062.html