Mortgage blog: Choice of buy-to-let mortgage deals hits six-year high
If you're looking to take out a buy-to-let mortgage then you now have the best choice of deals since 2008. According to new research from Moneyfacts, the choice of buy-to-let mortgage products has increased by over 40% in just one year, with over 650 deals now available.
Research has also found that investment returns from buy-to-let property have also reached their highest level in years. We look at the two reasons why now is a great time to invest in property.
Cost of buy-to-let lending falls to lowest level ever
The choice of buy-to-let mortgage deals has risen to a six year high, according to data from Moneyfacts. The financial data analysts found that there are currently 665 buy-to-let products available, a rise of 42% on the 466 deals available in July 2013.
The research also found that the average cost of a buy-to-let mortgage has fallen to its lowest level ever. The average cost of a fixed rate buy-to-let mortgage is now just 4.17% while the average variable rate is even lower, at 4.03%.
Keith Osborne, editor of whathouse.co.uk, says: "One of the reasons that lenders are focusing on the buy-to-let market is that it falls outside the recent Mortgage Market Review. New regulations introduced in April don't affect buy-to-let loans. This means the process for underwriting such an application is much quicker and simpler than the equivalent residential mortgage."
Experts also believe that recent changes announced to the pension rules could be having an impact, with many investors set to consider a buy-to-let property as a way of supplementing their retirement income.
Returns on buy-to-let investments reach highest level since 2010
While the choice of buy-to-let mortgages is at a six-year high, landlords have seen the returns on investment property reach their highest level since 2010.
According to the latest Buy-to-Let Index from LSL Property Services, total annual returns on the average rental property reached 11.8% in the 12 months to June, up from 5.5% a year ago, and the highest level seen since June 2010.
Although the average gross rental yield has fallen by 0.3% in the last year - to 5.1% - rising property prices have bolstered investment returns. According to the report, if rental property prices continue to rise at the same pace as over the last three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 13.4% over the next 12 months, equivalent to £23,718 per property.
And, if you're looking at a buy-to-let property outside London then you can expect your returns to be even higher. Research from lender BM Solutions has found that rental yields in London in the second quarter of 2014 were 5.7% compared to a national average of 6.2%. The most profitable regions were the North West, North East, West Midlands and Wales which commanded average rental yields of 6.4%.
Phil Rickards, head of sales at BM Solutions, said: "London has long been seen as the centre of the rental market, with demand outstripping supply and the shortest void periods. However, for the greatest return, looking further afield may be just as an attractive option."
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