Data from the CML shows lending to buy-to-let landlords has increased by 26% in the last quarter of 2014 compared to the previous year.
The Council of Mortgage lending (CML) survey shows there were 54,000 buy-to-let investor loans in the fourth quarter of 2014 with a value of £7.7 billion exceeding the same quarter in 2013 by 13% by volume and 26% by value.
This compares to lending for first time buyers in quarter four with 80,100 loans advanced which is unchanged on the same quarter in 2013. The value of loans was £11.6 billion which was only 5% higher than the previous year.
Both home movers with 93,100 loans and remortgage buyers with 73,100 loans experienced declines for the quarter when compared to 2013 of 5% and 13% respectively.
Fixed rate mortgages now cheaper
Fixed rate mortgage costs have been decreasing with some lenders reducing their 10 year fixed rates to below 3% interest.
For remortgage buyers at the end of your mortgage deal, avoid the lenders expensive variable rate and switch to a preferential rate to reduce your monthly repayment costs.
This is feeding through to buy-to-let mortgages as the number of loans available has increased to more than 800 on the market from lenders.
Currently the best two year fixed rate mortgage to landlords is about 3.5% with an average for all fixed rate deals at 3.8% compared to 5.0% in 2012 and variable rate deals at 3.6% compared to 4.4% in 2012 according to Moneyfacts.
For landlords the best deals are available for those with the largest deposits and with 40% deposits it is possible to find a 4.2% five year fixed rate.
Lenders still require buy-to-let landlords meet a minimum criteria with a 25% deposit and 125% rental income over a notional mortgage interest rate, usually set at 5%.
For older equity release mortgage buyers, fixed rates can typically be secure from interest rates of 5.8% upwards without any evidence of earnings which is important for borrowers with only pension income.
Buy-to-let leading the mortgage market
Overall for 2014 homeowner house purchases totalled 676,900 loans increasing 11% on 2013 with a value of £112.7 billion advanced up 19% on 2013, the highest annual values since 2007.
For buy-to-let loans the total was 197,700 with a value of £27.4 billion, an increase of 23% by volume and a staggering 32% increase by value.
First time buyers were also strong over the year with a total of 311,500 loans advanced for house purchases and value of £45 billion, an increase of 15% by volume and 24% up by value.
Figures for home movers were also positive for 2014 with a total of 365,400 loans advanced and value of £67.6 billion, an increase of 8% by volume and 16% up by value.
The worst results was for remortgages with a total of 303,100 loans advanced and value of £67.6 billion, a decrease of 6% by volume and 16% increase by value.
Even so the low interest rates are boosting the growth of the buy-to-let property sector which is growing significantly faster than first time buyers, home movers or remortgage buyers.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as pay for care at home or even help your children start or expand a business.
Learn more by using the mortgage cost calculators, property value tracker chart and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
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