Tue 26th Sep, 2006
Buy-To-Let Market Increasing
Buy-to-let lenders issued 130,400 loans in the second half of last year. This is a 39% increase over the first six months. The Council of Mortgage Lenders released this information. Overall the figures show that both loans and remortgaging made a significant contribution to the growth of new buy-to-let lending in the second half of last year. This may have been the result of a softening in the lending criteria.
Many consumers are looking to the Buy-To-Let Market to offer a residual income, pay of their debts, and hopefully, afford them a financially secure future. This is not always the case. Even if the home remains occupied, increases in taxes, fluctuations in interest, and an increase in utility bills can make the buy-to-let mortgage a risky venture. This is why many lending companies avoid awarding buy-to-let mortgages. R residential property must earn a minimum of 25% rental profit before the buy-to-let lender will consider the risk.
The CML’s Director General Michael Coogan said:
“There was a notable pick-up in the buy-to-let sector in the second half of last year, so that lending in 2005 modestly exceeded the year before.”
“Despite slowing house prices last year, residential property remains a popular investment, and this is set to continue in 2006.”
There are rumors that the decrease in the overall mortgage market, a total of 18%, may explanation why lenders anticipate in an increase in the demand for rental property. This could explain why they are opening up their restrictions on buy-to-let mortgages and loans. Consumers are taking out buy-to-let mortgages and loans anticipating that the increase in rentals will lead to an increase in rental prices, offering them more profit on their investment.