Buy-to-let renaissance continues

The buy-to-let mortgage market is continuing to show renewed growth as more lenders enter the marketplace or relax criteria.

According to TBMC's Landlord Profile Tracking Index, optimistic signs during the first quarter of this year included higher loans on offer during the period.

The index also showed terrace houses and flats are the most popular property types.

Andy Young, chief executive at TBMC, said: "During Q1 2011 the average loan size for offers received by TBMC was £136,359, up from £130,145 in the previous quarter - an increase of almost 5%.

"Average loan-to-values also continued to rise during the period, with 49% of mortgage offers made with LTVs of over 70% and the overall average LTV at 66%. This reflects the increase in lenders offering more 75%, 80% and even 85% LTV buy-to-let mortgages.

"During the course of last year fixed rates were a more popular choice by landlords, making up 63% of applications in the last quarter of 2010, with just 37% of applications for variable rates. However, this preference appears to be changing as the Bank of England base rate has remained at its historical low of 0.5% throughout the first quarter of 2011.

"During Q1, 52% of applications were for variable rates, perhaps reflecting opinion that any interest rate changes during the year will be small. There have also been some very attractive discounted rates available via a number of regional building societies, resulting in an influx of applications for these products.

"Interestingly, the average rates chosen during the period increased slightly. The average fixed rate was 5% (up 0.24%) and the average variable rate was 4.20% (up 0.13%). However, one set of results is not sufficient to tell whether this is a developing trend or just a minor deviation compared with the previous quarter.

"According to the index, terrace houses (33%) and flats (31%) are the preferred buy-to-let investment properties for landlords in the UK, accounting for over 60% of the mortgage offers received during the last quarter. This is a consistent trend observed since the index started, together with over 90% of buy-to-let tenants being either families or professionals. These options are clearly the most reliable for a good yield.

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