Buy-to-let mortgages reach record high

According to research, the amount of buy-to-let mortgages available is at is at its highest on record.

It has been revealed that there were 644 products available at the end of March according to researchers, Mortgages for Business. This is ten times higher than at the lowest point of the financial crisis in May 2009 and is even a third higher than the figure recorded in 2008, before the crash struck.

This news has been welcomed by Applegate and as it suggests the private rented sector continues to go from strength to strength.

Mortgages for Business said competition between lenders is driving changes in buy-to-let mortgage prices rather than the cost of funds in monetary markets.

It also revealed the number of mortgages at 75 per cent loan to value (LTV) accounted for nearly half (45 per cent) of total deals in the first quarter of 2014.

David Whittaker, managing director of Mortgages for Business, stated: “It is evident that the 75 per cent LTV market is now where the competitive action is – although the full extent of this counter-intuitive pricing is only apparent once the full costs of arranging the mortgage are factored in.”

The organisation found the average 75 per cent LTV mortgage is no more expensive, and even cheaper in some instances, than the typical 65 per cent LTV mortgage. Only five-year fixed rate mortgages cost less at 65 per cent.

Mr Whittaker said this is good news for investors with smaller deposits and suggests lenders are looking to increase their margins on lower LTV products in a bid to recoup the losses they are making on the 75 per cent range.

Mortgages for Business revealed two-year rates are the most common form of buy-to-let mortgage, with five-year rates accounting for only 14 per cent of the market, although this is up from just five per cent in 2010.

“Borrowers like two-year products because the lower pay rate and stress test usually fit their cash flow and return to invoice cover requirements,” added Mr Whittaker.

Applegate Properties Director, Amy Wray commented: “The news that the Buy-To-Let Mortgages have increased proves that the lettings market is growing beyond expectations. We have seen a significant increase in properties to rent in our portfolio and with that, properties being let faster than we have seen in previous years.”