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Rising house prices beneficial for landlords

11 March 2015

Rising house prices beneficial for landlordsWithin the last year, the amount buy-to-let landlords have been putting down in deposits has risen by 15% to approximately £100,000.

This has been very beneficial for landlords as high cash deposits have helped landlords’ access better interest rates, according to the Mortgage Search Tracker from the Mortgage Advice Bureau.

The Mortgage Advice Bureau said that landlords are representing a more secure prospect to lenders and have been increasing their chances of securing lower interest rates when they have more equity behind them as the average loan to value rates pursued by borrowers’ drops.

The data suggests that buy-to-let borrowers are now applying for mortgages with £99,914 of equity behind them, a rise of £13,289 in the last year.

Additionally, the average property value among buy-to-let borrowers remained at approximately £230,000, similar to the £231,000 sought by the average homebuyer. However, buy-to-let customers are looking to borrow over shorter periods of time.

Brian Murphy, Head of Lending at the Mortgage Advice Bureau said: “Landlords are in an especially strong position to use their recent equity gains to negotiate a better mortgage deal. House prices have settled into a steadier pattern in recent months, but the current low rate environment offers many buy-to-let borrowers the chance to reassess their finances”.

With the general election under 60 days away, it is suggested that house price growth expectations have fallen to an 18-month low and it’s predicted that there will be a slower price appreciation in 2015, compared to last year.

History does tell us that the activity levels within the property market running up to elections of the past have cooled down, followed by an increase within the market for the rest of the year.

What will we see throughout the rest of 2015?