Research published by the Mortgage Advice Bureau (MAB) revealed that seven in 10 buy-to-let investors looking for a mortgage in Q3 searched for a property valued below £250,000, with 35% of landlords looking for a property worth under £150,000.
In comparison, the proportion of landlords interested in properties priced between £250,000 and £499,999 has almost halved over the past 12 months to total 24% from 44% in Q3 2014.
The findings which used data from over 250,000 monthly product searches via price comparison sites, showed that as mortgage rates continue to fall landlords are also looking at higher loan-to-value (LTV) mortgages.
The most popular LTV ratio searched for by landlords was between 70% and 79.99%, with two in five investors searching for mortgages with this term, up 10% on the same time a year earlier.
While higher LTV deals increased in popularity, searches for lower LTVs dropped with the proportion of landlords looking for LTVs below 60% falling from 27% to 22%.
Despite this shift in investor attitude, just a handful of landlords are looking for LTVs above 80%, with 15% looking for these mortgages, a 1% increase compared to a year earlier.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “As rental demand remains strong nationwide, opting for a cheaper property can result in more attractive yields. It appears many landlords are looking to invest in areas outside the South of England, where property prices won’t hold them back from making a profit.
“Mortgage rates have plummeted throughout 2015, with buy-to-let investors benefiting from competitive pricing as well as residential buyers. Although higher LTVs generally mean more costly monthly repayments, falling rates mean landlords may find they can now afford higher LTV products.”
