Mortgage News
Buy-to-let market begins to fight back
The number of buy-to-let mortgages has grown 70% since its lowest point in September 2009, as the sector begins to show signs of recovery, according to Moneyfacts.co.uk.
Moneyfacts.co.uk figures show that since September last year, the number of buy-to-let products has increased from 179 to 304. However, this is still a significant way off the sector’s peak of August 2007 when there were 3662 deals available.
Nevertheless, the range of products at higher LTV levels has also seen an upturn. In September 2009, the greatest number of buy-to-let deals (30.6%) were available to 60% LTV. This has now switched to 75% deals, which now make up 29.07% of the total number, up from 24.2% in September.
Deals at 70% LTV now make up just over a quarter of all buy-to-let mortgages, up from just over a fifth, while 80% LTV remains restricted, accounting for just 4.24% of the market, up from 1.4% at the market’s lowest point.
In addition, lenders are reappearing in the sector and the average rates of products have continued to fall.
Darren Cook, spokesman for Moneyfacts.co.uk, said: “This is encouraging news for investors, especially those who were locked out of the market as the maximum available LTV fell.
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“Competition has returned to the market, as lenders make cuts to their new borrowing rates.
“Saffron and Melton Mowbray Building Societies have returned to the market during the past month, while new lender Bank of China continues to successfully find its niche. Both are signs that this market is starting to become a more viable and safer option for lenders.”
Yet, Cook warned that the predicted changed to capital gain tax (CGT) could put the buy-to-let sector’s recovery at risk.
He said: “Government sources predict that CGT on non-business assets, including buy-to-let properties, could rise from 18% to a figure that could be as high as 40%.
“In a separate blow the annual exemption limit for CGT, currently £10,100, may come down to as low as £2,500. This will bring hundreds of thousands more people into the tax net.
“One possible consequence could be an increase in the preferred investor properties on to the market as people scramble to take any current gains.
“The changes could spark a downward price spiral, but could create opportunities for both homebuyers and potential landlords.”