Growth rate in buy to let mortgage products begins to tail off

The growth in buy to let mortgage products - rising rapidly until recently - has now begun to drop off.

Products increased in number by just 75 in the second quarter of this year compared to an increase of 142 in the first quarter, and much of the rise in the most recent period was due to lenders introducing different ‘stress test’ levels, in line with anticipated guidance from the Bank of England. 

This market snapshot comes from the Mortgages for Business broker.

It says the average loan to value of HMOs increased from just 62 per cent in Q1 to 75 per cent in Q2 suggesting that investors are keen to stretch borrowing on this kind of letting property due to the consistently high returns on offer.

“For the more cautious investor and for those who like a mix of risk within their portfolio, 6.1 per cent average yield on a standard BTL still represents a good return. And for the more experienced investor, HMOs certainly perform better than all other types of rental property averaging just below 10 per cent since 2011” explains David Whittaker, managing director of Mortgages for Business.


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