Buy to let market benefits from improved rates and loan to values (LTVs)

TBMC’s Landlord Profile Tracking Index shows the buy-to-let market saw a fall in fixed rates, a rise in average LTVs and an increase in rental yields in Q4 2012.

Andy Young, chief executive of TBMC, said: “2012 was a successful year for the buy to let market, seeing an increase in new buy-to-let lending compared with 2011 according to the Council of Mortgage Lenders.

“At the end of Q3 2012, buy-to-let lending was up 19% on the same period in 2011.”

The expansion of the buy-to let market has led to greater competition between providers and lower fixed rates.

The Index reveals that the average buy-to-let fixed rate mortgage offer processed by TBMC was offered at 4.67%, down from 4.88% in the previous quarter.

The final quarter of 2012 also saw an increase in the average LTVs for mortgage offers processed by TBMC to 73.11%, compared with 72.63% in Q3 2012.

Andy Young added: “With improving conditions in the buy-to-let mortgage market during 2012 there have been more lenders and products available at higher LTVs which have enabled landlords to borrow more and employ higher gearing in their property investments.

“The buy-to-let sector has certainly stabilised and remains an area of opportunity for intermediaries. 2012 saw growth in the buy-to-let mortgage market, albeit modest, and this trend is expected to continue in 2013.”

TBMC is expecting total new buy-to-let lending in the UK to be circa £15.5bn in 2012 increasing to as much as £18bn during 2013.

Peter Lawrence at Lawrence Rand said: “This is the latest in a number of reports outlining the strength of the buy to let marketplace.

Landlords are benefiting from competitive mortgage rates and high tenant demand, resulting in excellent investment yields being obtained.”