Buy to let lending statistics reveal that demand from landlords is soaring.
The latest Council of Mortgage Lenders (CML) figures show the appetite from property investors for new deals was up nearly 19% in the past year and total lending increased by a fifth.
But landlords should be wary of parties with a financial interest talking up the sector.
First, although buy to let mortgage lending is definitely on the rise, the amount and value of mortgages is still far below the peak of 2007.
Next, the CML figures show that a consistent half of all new mortgages are remortgages, which means either landlords are consolidating to cheaper deals or raising deposits for new rental properties.
As house prices have increased by a small margin and loan-to-values and lending criteria have tightened, the likelihood is the real buy to let market maybe buoyant but involves a small number of borrowers.
Few will be able to afford to raise the 20% or more deposit, arrangement fees and buying costs from remortgaging just one buy to let home.
Sentiment surveys, like those from Paragon and BM Solutions reveal landlords would like to invest in more property, but the independent statistics from the CML reveal otherwise on a deeper analysis.
Nevertheless, the Post Office has decided to lend to property investors once again.
The deals are two, three and five year fixed rates at between 60% and 75% loan to value., but...
the real headline is some of the mortgages come without arrangement fees.
However, unless the Post Office has a secret supply of money, the likelihood is their borrowing is on the same terms as banks and building societies, so it’s the way the deal is structured and marketed that makes the difference.
In fact, the two best deals – a two year fix at 2.98% at 60% LTV or 3.29% for 75% LTV both come with £1,495 arrangement fees.
The fee-free mortgage is a three year fix at 3.99% at 60% LTV or 4.49% for 75% LTV.©LandlordZONE® – legal content applies to England and is not a definitive statement of the law, always seek professional advice. If you have questions on these issues go to the LandlordZONE® Forums