TBMC has published results from its Landlord Profile Tracking Index for the final quarter of 2012.
The buy-to-let and commercial mortgage specialist found that over Q4, fixed rates fell, average LTVs continued to rise, while average rents remained strong and rental yields increased.
Andy Young (pictured), chief executive of TBMC, said: “2012 was a successful year for the buy-to-let market, seeing an increase in new buy-to-let lending compared with 2011 according to the Council of Mortgage Lenders. At the end of Q3 2012, buy-to-let lending was up 19% on the same period in 2011 (final figures for the year to be published in February 2013).
“This significant uplift has been reflected in a greater choice of products being offered by a wide range of lenders. In fact TBMC placed buy-to-let mortgage business with 27 different lenders during 2012.
“Generally speaking, the expansion of the buy-to-let market has led to greater competition between providers and as a result there are some very good deals currently available. What is notable about the last quarter is the trend for lower fixed rates, with the average buy-to-let fixed rate mortgage offer processed by TBMC at 4.67%, down from 4.88% in the previous quarter. This suggests that the Government’s fiscal measures, including the Funding for Lending Scheme, are enabling lenders to offer lower interest rates to borrowers, and may also reflect falling swap rates during Q4 2012.
“Interestingly, TBMC saw a rise in the average variable rate for mortgage offers during the last half of 2012, with fixed rates and variable rates now converging to become closer than they have been for at least two years.
“This could imply that lenders are increasing their margins on variable rate products, but it is also possible that the higher LTV (and therefore higher priced) products now available in the buy-to-let mortgage market are impacting on rates charged. With fixed rates becoming more competitive, they are likely to be a popular option for landlords, and during Q4 2012, 47% of TBMC’s mortgage offers ￼were for fixed rates compared with 53% for variable rates. This is a noticeable shift from the previous quarter when just 41% were for fixed rate mortgages and 59% were for variable rates.”
He added: “With improving conditions in the buy-to-let mortgage market during 2012, there have been more lenders and products available at higher LTVs, which have enabled landlords to borrow more and employ higher gearing in their property investments. Following the trend for the previous three quarters, Q4 2012 saw an increase in the average LTV for mortgage offers processed by TBMC to 73.11%, compared with 72.63% in Q3 2012.”