Its latest Complex Buy To Let Index showed that in Q1 2010, an average of 142 products were available to buy-to-let investors. This figure has more than doubled to an average of 298 products in Q1 2011.
Mortgages For Business believes this rise is due in part to the entrance (or re-entrance) of four mortgage lenders to the market but can be attributed mainly to lender response to high demand from the investor market and an easing of lending criteria which has allowed for more diverse product ranges.
Average LTVs for vanilla buy-to-let transactions are now at 66%, three percentage points up (63%) from the end of 2010 and six percentage points up (66%) from the end of 2009. There has also been an easing of criteria for Houses in Multiple Occupation (HMO) transactions. Average LTVs for these mortgages are now 63% compared to 61% at the end of 2010.
Complex BTL transactions provide the highest yields for investors and yield growth has been strong over the first quarter of 2011. HMO transactions now provide an average yield of 9.3% compared to 8.7% at the end of 2010 and Multi-Unit Freehold Blocks (MUFB) now yield 7.4% compared to 5.3% in 2010.
David Whittaker, managing director at Mortgages for Business, commented: “As the owner-occupier market continues its slow ambling advance through no-man’s land the private rental sector is flourishing. Unprecedented demand from renters is encouraging professional landlords and investors to grow their portfolios and this demand has been met to some degree by lenders expanding their BTL product ranges, particularly in the vanilla section of the market.
“But savvy investors know the best returns are available from more complex deals. HMO and MUFB deals can offer yields of nearly 10% which is a staggering return on investment when compared to the meagre returns offered by savings and investment funds.”
Philip George, joint managing director of Whiteaway Laidlaw Bank, welcomed the launch of the index saying: “This data analysis is timely for our launch on Thursday 7th April and adds to our database in sectors that will be important to our diverse new lending programme. We look forward to working with Mortgages for Business on this initiative and will compare our own data carefully with their outputs into Q2 and beyond.”