According to the Index, this increased competition is bringing about new product ranges and greater choice for landlords, as well as better schemes being offered to buy-to-let investors enabling them to borrow more at higher gearings.
TBMC produces the Landlord Profile Tracking Index to track developments in the UK buy-to-let mortgage market. Its findings for Q1 2011 highlight several interesting trends for the sector, including:
• Higher loans amounts offered during the period
• Growing interest in tracker rates
• London is the most popular city for buy-to-let investment followed by Portsmouth, Sheffield and Brighton
• Over 90% of buy-to-let tenants are families or professionals
• Terraced houses and flats are the most popular buy-to-let properties
Commenting, Andy Young, chief executive at TBMC, said: “During Q1 2011 the average loan size for offers received by TBMC was £136,359 up from £130,145 in the previous quarter – an increase of almost 5%. Average loan-to-values (LTVs) also continued to rise during the period, with 49% of mortgage offers made with LTVs of over 70% and the overall average LTV at 66%. This reflects the increase in lenders offering more 75%, 80% and even 85% LTV buy-to-let mortgages.
“During the course of last year fixed rates were a more popular choice by landlords, making up 63% of applications in the last quarter of 2010, with just 37% of applications for variable rates. However, this preference appears to be changing as the Bank of England base rate has remained at its historical low of 0.5% throughout the first quarter of 2011.
“During Q1, 52% of applications were for variable rates, perhaps reflecting opinion that any interest rate changes during the year will be small. There have also been some very attractive discounted rates available via a number of regional building societies, resulting in an influx of applications for these products. Interestingly the average rates chosen during the period increased slightly. The average fixed rate was 5.00% (up 0.24%) and the average variable rate was 4.20% (up 0.13%). However, one set of results is not sufficient to tell whether this is a developing trend or just a minor deviation compared with the previous quarter.
“According to the Index terraced houses (33%) and flats (31%) are the preferred buy-to-let investment properties for landlords in the UK, accounting for over 60% of the mortgage offers received during the last quarter. This is a consistent trend observed since the Index started, together with over 90% of buy-to-let tenants being either families or professionals. These options are clearly the most reliable for a good yield.
“Unsurprisingly, the results of the Index show that London is the most popular location for buy-to-let investment with over 17% of mortgage offers received for properties in the capital city of England, followed by Portsmouth, Sheffield and Brighton. Major cities such as Birmingham, Manchester and Cardiff also show steady buy-to-let property investment.”