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Brokers want better BTL products

Amanda Jarvis

May 30, 2006

The buy-to-let market has seen strong results year on year with brokers and their clients vying for good returns on their investments. Last year saw a record number of buy-to-let mortgages and over the last two years, the market has grown by nearly 20 per cent.

Over three quarters of mortgage brokers (76 per cent) saw a rise in demand for buy-to-let loans in the last three years. Over half of brokers (55 per cent) believe the market will continue to grow in the next two years, with nearly one in five (19 per cent) optimistic that it could increase by more than 10 per cent.

And they believe better value products will be the key driver for market growth. Of all the regions, the majority of brokers in London (59 per cent) are calling for this compared with a third of brokers in the North West (35 per cent), North East and Yorkshire (35 per cent). They also want more ‘big name’ brands to enter the market. Nearly two-thirds (63 per cent) of all brokers are calling for more well-known lenders to enter the buy-to-let market — four in five (81 per cent) brokers in the South West

Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, said: “It comes as no surprise that brokers are calling for better value for buy-to-let mortgages as the market is becoming increasingly mainstream as more people are investing through buy-to-let as a means of enhancing profits or supplementing their pension income.

“Brokers expect to see the same degree of intense competition and product innovation as they have come to expect from the prime lending market. They understand that this market will need good value products to sustain and assist the kind of growth they are expecting. There is no doubt it will drive competition up and will promote better products that are suited to brokers and their clients.”

The research also reveals that brokers and clients agree on what they consider important aspects in the market. Innovation, such as flexibility on lending criteria and competitive pricing, are high on the agenda for 77 per cent and 66 per cent of brokers respectively. Nearly two in three brokers (62 per cent) say their clients consider returns as a priority when choosing a buy-to-let mortgage, rental yield to interest calculation and headline rate are the most important aspects for them. Over one in ten brokers (11 per cent) also cite flexibility as important to their clients.

Yousefi said: “Buy-to-let is a strong market and our thoughts are echoed by mortgage brokers in the UK. Broker feedback suggests that they are encouraged by business and have enjoyed seeing a rise in demand in this area. Most brokers say that rental yield and the headline rate are the top two considerations for clients when searching for a mortgage which suggests that consumers are still finding great investment value in the property market.”


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