Charles Haresnape is managing director at Aldermore Mortgages
2012 is the Chinese year of the Dragon (which begins on January 23rd, by the way).
In ancient China the celestial dragon represented power but today it’s a symbol signifying success and happiness. Let’s hope the Chinese dragon can breathe life into the UK mortgage market and bring us all success and happiness in 2012.
Actually it may already be exerting its magical influence because the buy-to-let market is going from strength-to-strength.
The number of buy-to-let deals completed last year increased steadily from 25,600 in Q1, to 29,700 in Q2 and 34,500 in Q3 and the growth looks set to continue.
A shortage of first-time buyer finance combined with high numbers of students, single person households and immigration are all fueling this growing market.
According to an investor survey undertaken recently by Paragon, 56% of landlords believe tenant demand will strengthen in 2012 and the National Landlords Association has also confirmed that average rental yields are currently 6.7%. No wonder demand for buy-to-let mortgages is on the increase.
And lenders are responding to this demand. At the time of writing, Paragon had just announced a suite of new buy-to-let deals, the Coventry had launch a five year buy-to-let mortgage with no early repayment charges and at Aldermore we have increased our maximum buy-to-let loan to value to 80%, reduced our reversion rates by 0.5% and have increased our maximum portfolio size to five properties and £2m and these are just our headline changes. In October 2008 there were just 237 buy-to-let deals on offer. Today, that number has more than doubled.
The reality is that brokers now have more products, more accommodating criteria and more competitive rates to choose from in the buy-to-let market, than they have done since the onset of the credit crunch. And competition will inevitably drive further enhancements during the months to come. Yes, that Chinese dragon certainly seems to be bringing good fortune.
Let’s hope that the positive start made in the buy-to-let market is mirrored in other sectors of the mortgage market over the coming months.
I hope you all have a successful and happy Chinese New Year!
