Buy-to-let loans reach 4-yr high

Buy-to-let loans reach 4-yr high

Buy-to-let mortgages totalled £16.4 billion in 2012, which is the highest level for four years.

Summary:

  • Mortgages reached £16.4 billion last year
  • This is £1 in every £7 for total mortgage lending
  • The amount borrowed by landlords in 2012 was the highest in four years

The amount of money being lent to buy-to-let investors has reached the highest level in four years.

This is according to a report published by The Daily Mail, which revealed £16.4 billion was borrowed by landlords in 2012. This equates to £1 in every £7 lent to mortgages in total.

Journalist Victoria Bischoff stated there are many reasons for this rise in buy-to-let mortgages, including a decline in house prices encouraging prospective landlords to purchase properties and more relaxed lending criteria from banks, as landlords are “viewed as less of a risk”.

The writer went on to say lots of people are also considering buy-to-let investments as an alternative to savings accounts and particularly looking at them as ways to consolidate their pension.

As rental incomes can be substantial, they provide a far higher financial return compared to traditional savings options and pension products.

LSL Property Services reported the average rental yield for buy-to-let properties was 5.3% in April, which is significantly more than savings account rates, which are typically 0.77%, the newspaper reported.

The organisation stated typical monthly fees in England and Wales were £736 last month. In addition to this, it also revealed rents are increasing regularly and rose 0.2% between March and April and 3.9% from April 2012.

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