Jonathan Samuels, CEO of Dragonfly Property Finance, said: “There has been a phenomenal rise in the number of buy to let investors over the past six or so months.
“In a growing number of cases, we are seeing landlords refinance their existing portfolios to acquire new properties. With prices so low and rents so high, yields are exceptional right now.”
A survey from landlord trade body, the NLA reported the number of buy to-let products increased 25% from Q1 to Q2. Average loan sizes also increased by £2,166 to £138,525.80, representing a growth of 6.4% since January, it said.
Buy-to-let growth is being fuelled by lenders offering higher Loan-to-Values and more products for HMOs, said the NLA.
Over 50% of buy-to-let offers processed by NLA Mortgages were for loans worth over 70% LTV – giving an average LTV of 67% – and belief low interest rates are here to stay means 59% of all mortgage applications are for variable rates.
Meanwhile, in the mainstream market, gross mortgage lending strengthened to £8.2bn in August, which is a rise of 3% year-on-year, according to the British Banker’s Association (BBA).
House purchase approvals were 14% higher than July and remortgaging also increased by 10% year-on-year.
Repayment of loan and overdraft borrowing continues to outweigh new lending and approvals for all types of secured lending remains stable.
Despite the mild strengthening of house purchase and remortgaging figures in August, repayments continue at a high level, so net mortgage lending increased by just £0.7bn in the same month.
This month’s figures also showed savings levels tumbling sharply from £18.6bn over the first eight months of 2010 to £11bn so far this year.
BBA statistics director, David Dooks said: “The weak economic environment continues to undermine confidence in both household and business sectors, which impacts on borrowing demand.
“The banks’ new mortgage lending has ticked up in the past couple of months with higher buy-to-let demand, and some business sectors are edging towards year-on-year borrowing growth, although the general landscape is one of households not wanting to take on more borrowing and businesses waiting for trading conditions to improve before borrowing to expand or invest. Against this backdrop, paying down existing debt dominates the net lending figures.”
The average home value, at £145,500, has risen 1% in a year.
