Buy-to-let mortgage lender report states “increasing shift towards areas with higher yields”

Martin Ellis, the UK’s leading housing economist, authored the report which has found that buy-to-let investors are increasingly on the look out for properties that are cheaper and result in a higher yield.

In the report he goes on to predict a rise in interest rates by 0.25% within the next few months and that house price growth will increase by no more than 2-3% by the end of this year.

The report, which focuses heavily on buy-to-let mortgage content, summarises “demand for private rented accommodation is likely to remain strong over the foreseeable future, resulting in further upward pressure on rental levels and providing favourable returns. The long-term case for investing in housing remains strong with the sector set to continue to offer attractive rates of return compared to key alternative investment classes.”

“Investors are, however, increasingly likely to turn their attention to cheaper, higher-yielding properties to make the finances work. Indeed, there has already been a move away from London and the south to elsewhere. Many investors now have a presence in locations such as Manchester, with an increasing focus on other centres such as Leeds, Sheffield and Nottingham, as many seek to further diversify their portfolios.”

The report goes on to indicate that buy-to-let remortgage activity has been stable, with the volume of lending in 2017 only 0.6% lower than it was in 2016.

Buy-to-let mortgages represent nearly 13% of new mortgage lending in the UK. It declined by 28% in 2017 and is now at £10.7 billion, in comparison to £14.9 billion in 2016. However, despite this fall, 2017 still saw growth, with an annual average 67% higher than what it was in the period from 2009 to 2013.

The BTL mortgage market represents nearly 13% of new UK mortgage lending. The market grew from 840,000 BTL mortgages outstanding with a total balance of £93.2bn at the end of 2006, to 1.8m BTL mortgages with an aggregate balance of £93.2bn at the end of 2006, to 1.8m BTL mortgages with an aggregate balance of £214bn by the end of 2015; growth of 114% and 130% in the number and value of balances outstanding respectively.

In recent years, BTL was typically the strongest performing sector of the mortgage market. There were annual increases in the number of BTL loans to fund house purchase of 21% in 2014 and 17% in 2015. New BTL mortgages increased by nearly 200% between 2010 and 2016 with their share of all mortgages rising to 20% in 2015.

If you’re a landlord or investor looking at buy-to-let mortgages or property in the North West, particularly in Manchester, we’ll be more than happy yo help.

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