Buy-to-let loan-to-values rising
According to lender TBMC’s Landlord Profile Tracking Index, the average LTV ratio for buy-to-let mortgages has risen to 72.63% in the last three months. The rising number of 80% LTV mortgages on the market, alongside the 85% LTV deals from Kent Reliance are a factor, found the report.
Variable rate mortgages proved increasingly popular during the quarter, with tracker deals now accounting for 60% of the total market. The average rate was 4.40%, a rise of 0.30% on the previous quarter.
Meanwhile, the average fixed rate mortgage fell to 4.88% from its previous level of 5.06%.
Student tenants continue to return the highest rental yields at 8.23%. Terraced houses proved the most popular property type with yields of 7.28% compared to a national overall rental yield of 6.60%.
Andy Young, chief executive of TBMC, commented: “The buy-to-let mortgage market has continued to improve throughout 2012 with more lenders and products now available for brokers and their landlord clients to choose from.
“This has led to greater competition in the market and there are currently some excellent deals available. There has also been some softening of criteria by some lenders, increased LTVs and a lowering of rates.
“With variable rates still cheaper than fixed rate products, more landlords are opting for lower initial rates, which may reflect a growing consensus that interest rates will continue to remain low for some time to come.
“The increase in the average variable rate can be attributed to the availability of higher LTV products which are also priced higher.
“In terms of the split between purchases and remortgages, it was absolutely even during Q3 with 50% of applications received for each type. This demonstrates the keen appetite amongst landlords looking to take advantage of the excellent remortgage deals available to release equity from their existing properties, and those looking to expand their portfolios with the purchase of additional properties.”