Rise in buy to let mortgages driven by consumer demand for housing
Recent data has indicated that there has been a massive increase in buy to let mortgages, with more and more people in the UK looking to move into rented accommodation.
The higher house prices couples with interest rate boosts has resulted in many people having to opt for renting property rather than buying for themselves, which has added to the demand for private and social housing in the UK. This is good news for those with the available capital to invest in properties, as it means that they can sink their money into an investment that will reap a healthy income for them.
As a result of the greater demand for rented housing stock in the UK, lenders have seen buy to let mortgage figures rocket recently, and according to recent data the buy to let mortgage figures represented around eleven percent of the mortgage figures as a total. The buy to let mortgage market was worth nearly forty billions pounds last year, a massive rise of fifty seven percent compared to figures in 2005.
Also, according to data released by the Council of Mortgages Lenders there was a rise of forty eight percent in the number of buy to let mortgages taken out in 2006 compares to 2005, with around three hundred and thirty thousand buy to let mortgage loans taken out last year.
Nigel Terrington, chief executive of Paragon, said: "Tenant demand is driving the market forward. Rising immigration, growing household numbers, expanding student population and the increasing tendency of young people to defer their first home purchase all mean there is a need for greater flexibility in our housing stock."
However, some experts are now predicting that there will be a cooling period in the mortgage market in general following three interest rate rises enforced by the Bank of England between last August and last month.
Tom Smith
24th February 2007
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