Buy-to-let borrowing on the rise

20th February 2012

Lenders are moving to increase the selection of buy-to-let mortgages they offer due to their profitability compared to other types of loan, Landlord Mortgages has claimed.

As landlords look to take advantage of a growing rental market, lenders are becoming more willing to supply finance, and this is leading to a boom in the growth of buy-to-let style mortgages.

The increased preference for borrowing through such methods can be explained by the higher margin on mortgage rates that exist when compared to the more competitive first-time buyer market.

With this in mind, Lee Grandin, director at Landlord Mortgages, has said that "lenders see buy-to-let to be a profitable mortgage for them," and this can help explain the growth now being seen in lending associated with renting property.

Mr Grandin continued that "the lenders can make more money on it [buy-to let], and secondly, the rents are very good for the landlord."

Given the new stimulus provided to such mortgages, rental markets look set to carry on expanding throughout the country, with lettings agents in Manchester likely to benefit as demand increases due to the BBC's move to the area.

Indeed, taking into account the continued and growing difficulty facing first-time buyers, renting is becoming an ever more attractive option, and this news will serve to boost the confidence of landlords and lenders alike.

Research carried out by Paragon mortgages found that over a third of intermediaries saw an influx in buy-to-let business in the final quarter of 2011 - further evidence of the new popularity of such deals among lenders.

In the long run, this could potentially lead to greater competition as lenders look to improve their share of the market - a factor that could also result in an increasing number of prospective landlords looking to take advantage of changing conditions.