Buy-to-let mortgage boost

The buy-to-let market looks good in October, boosted by cheaper mortgages and strong rental demand.

That is according to Mortgage Trust’s October buy-to-let forecast, which points to competition between lenders driving down rates making mortgages cheaper for landlords.

"[Buy-to-let] intermediaries welcome further product development and believe that healthy competition in the market serves to boost the sector," said Nicola Severn, marketing manager at Mortgage Trust.

One buy-to-let intermediary in two said the increased availability of more innovative and competitive mortgage products contributed to building more buy-to-let business.

This boost is set to be supported by strong rental demand and a positive outlook for the housing market overall.

And as the positives stack up, Mortgage Trust's survey is pointing to a return of the new investor for the first time in seven months.

And buy-to-let landlords are as upbeat about the sector as intermediaries.

Specialist lender Paragon Mortgage finds that the vast majority of landlords are experiencing stable or growing tenant demand, with 38 per cent saying rents have increased over the last six months.

And spurred on by a drop in interest rates and increased rents, investors are set to increase the number of properties they own as well as expecting them to increase in value.

"This is to a significant extent a result of lower financing costs following the interest rate reductions, with investors able to borrow at very competitive prices, either on a fixed or variable rate basis. This has fed through into the recent resurgence of activity. In numerical terms, property investors expect to grow the size of their portfolios by 3.4 per cent from the current 11.8 to an average of 12.2 properties," John Heron, Paragon Mortgages’ managing director, explained.