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Buy to let mortgages increase by about a third

[ Posted May 18th, 2012 ]

According to figures from the Council of Mortgage Lenders buy to let mortgages continue to be the product of choice on the mortgage market with a marked increase of almost 32% during just the first quarter of this year.  This has also led to the introduction of many new buy to let mortgage rates across the market for potential property investment as many are deciding to rent instead of purchase homes creating a high demand for the rentals.  The CML also stated that repossessions have finally started to steady marking a decline in the amount of foreclosures that are affecting banks and the market.

This is the third year in a row that the value of different mortgages taken out for buy to let purposes has increased.  Increasing rents and the overall decrease in house prices are making many investors and landlords take a second look at the buy to let market.  Some are even securing commercial mortgage deals with the intent of renting them back out to businesses and organizations that do not want to get tied to a mortgage or cannot get approved for the structure that they need.

Over the first quarter of the year about 32,300 loans with a combined value of about £3.7bn were offered to buy to let investors.  While this is a stunning 32% increase it is still only about a third of the lending that was seen back in 2007 before the mortgage market crashed.  The CML stated that most of the property market is now spoken for by the buy to let sector, and banks seem to be responding to this fact as the best mortgage rates are generally offered to buy to let lenders over other lenders.  Today the CML estimates that about 12.8% of all outstanding mortgages are buy to let mortgages.

While buy to let mortgages are continuing to become more popular, one reason that they may not have reached the same heights as in 2007 is due to the fact that landlords are required to have larger deposits than they did back in 2007.  According to the CML, in 2007 the average LTV was about 85%, whereas today the average LTV is 75%.  Despite this fact, it seems very telling that rental mortgages are still more popular than home mortgages and reflects where the mortgage market is slowly heading.

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