Buy-to-let boom sees product numbers soar
A spot poll of mortgage brokers, conducted at IRESS’ recent buy-to-let roadshows, has revealed that nine out of 10 ten have seen the demand for buy-to-let mortgage products increase over the past 12 months, while just two out of a hundred have seen demand subside.
Dave Miller, executive general manager, sourcing, at IRESS, said: “Increasing product diversity is a sign of a healthy market, and reflects the confidence lenders have in the buy-to-let sector.
“The groundswell of tenant demand, combined with healthy returns on offer, is triggering an increasing demand for mortgage finance from property investors. However, at present, lenders are remaining cautious and keeping a lid on the variety open to those landlords with smaller deposits.”
This increased demand has been matched by an increase in product variety. Nine out of 10 intermediaries have seen the number of buy-to-let products available on the market increase over the same time frame, with 28% believing it has increased significantly and less than 2% seeing a decrease.
These figures are supported by IRESS’ analysis of data from its Trigold Prospector sourcing tool, which shows that over the first six months of 2014 the number of buy-to-let purchase products available to mortgage brokers has increased by 47%, to 2,470. Over the course of the last 12 months, there has been an increase of 55%.
Remortgage product choice in the buy-to-let sector has seen a similarly large leap, up by 38% in the six months to June, reaching a total of 2,554. Over the last 12 months, there has been an increase of 48%.
However the increase in products available has focussed on investors with the smallest deposits. The number of products for purchase aimed at those with a loan to value (LTV) of 85% has only seen a 12% increase in the past six months, and remain few, with the number at just 46 by the end of June. By comparison, at the other end of the spectrum, 60% LTV product availability has seen much faster growth, up by 55% over the same period to 289.
Brokers believe demand will continue to rise in coming months, with 75% expecting increased appetite for buy to let products. Of these, 58% expect this will be driven by increased demand for properties from tenants.
Miller added: “With house prices and the population continuing to increase, it is unlikely that we will see any sudden decrease in tenant demand, which in turn will underpin the long-term need for buy-to-let mortgage products, and make the sector increasingly an lucrative seam to tap for brokers.”