2012 will see the end of the world according to some. Maybe that is why some of the mortgage lenders are being so aggresive with their pricing, as they fear not having long to live.
It has been a while since we have seen such offerings in the buy to let market and people are certainly making hay while the sun shines. I have seen activiity levels increase dramatically in this sector and it has been missed I can tell you! We have seen the likes of Leeds Building Society, Aldermore and Clydesdale increase their loan to value to 80% with the added bonus of carrying flat fees. The Mortgage Works have long been the sole provider in this bracket, so I am sure they will actually welcome the competition to ease the levels of . Abbeys return to the market at 75% borrowing has been very very strong in addition, also with flat fees rather than being a percentage of borrowing. And right at the start of the year Paragon repriced and launched 50 new products with better pricing. All in all, the start of 2012 has seen some very positive steps in the buy to let sector.
The fact of the matter is, there were signs of this in Q3 and Q4 of 2011 and it is very encouraging that it seems to have pushed on into the New Year. I have heard from clients this month that I have not spoken to for some time looking to get back into the buy to let business. So why have we seen such an increase? Is it that demand for renting is now so high that tenants are finding they are having to go to sealed bids to "win" a property to let? Is it that the funding has become so appealing that it is drawing private landlords back out into the market so they can test the water again? Or is it simply that investment opportunities elsewhere in the financial sector are simply that poor that people are seeing very little alternative aside from Bank of Under The Mattress Ltd?
The fact of the matter is, there are a host of reasons as to why the buy to let sector is growing again. At present, we see no signs of this appetite abating. The price wars we are seeing between buy to let lenders are making the terms of borrowing more attractive, and the simple fact that mortgages are harder to come buy on a residential basis, is leaving more and more people with no option other than to rent, meaning the availability of tenants for landlords is probably the highest it has been for years. Coupled with the lack of funding for first time buyers (despite the pledge from "Knight in shining armour" HSBC to lend £3bn to first time buyers alone this year), there is little wonder why the buy to let sector is growing again. Sure, the short term growth in capital is not what it once was, but the old adage of "Its a marathon not a sprint" means that people investing in long term portfolios are still very confident in the returns buy to lets can bring. And with an average age of 38 for first time buyers now, who can blame them.
So buy to let lenders, we will be watching your offerings closely over the next few months. I personally would like to thank you for your boldness and return to agression. Long may it continue. Just do us all a favour and start being a little more generous with your restrictions on New Builds.
Actually...don't get me started on New Builds.
I'll be here all day!
And all night...
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