Intermediaries expect house prices and rental incomes to rise

Amanda Jarvis

March 13, 2006

58 per cent of buy-to-let intermediaries expect rental incomes to
increase, and 70 per cent expect property values to rise over the next 3

Recent data from the Council of Mortgage Lenders revealed that buy-to-let lending increased by 40 per cent in the second half of 2005, and with Mortgage Trust's latest research showing that 52 per cent of intermediaries expect to write more buy-to-let business over the next three months, thebuoyancy of the sector looks set to continue.

Intermediaries continue to expect the majority of their business to be generated by existing landlords, whilst loans to first-time landlords remain in the minority. Re-mortgaging is now expected to account for 45 per cent of intermediary business volumes, a significant increase from one year ago when the figure was 37.5 per cent. Increasing re-mortgage activity goes hand in hand with further investment, and indicates a
renewed appetite for buy-to-let investment, a likely result of recovering house prices, competitive mortgage deals and strong rental demand.

Nicola Severn, marketing manager at Mortgage Trust, commented: “Both our findings, and the figures released recently by the CML, indicate that there has been a definite upswing for the buy-to-let sector. Positive expectations for the housing market, recovering rental
yields and stable interest rates have all contributed to bolstering confidence among both investors and their advisers. The trend for remortgaging indicates that investors are releasing equity for further investment, however whilst landlords are actively managing their portfolios to ensure maximum return on investment, the majority are cautious investors who believe in responsible borrowing and have little desire to mortgage themselves beyond levels they feel comfortable with.”

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