On Saturday 8 July, Mortgage Express celebrates ten years of offering buy-to-let mortgages.
In 1996 Mortgage Express became the first lender to offer a dedicated mortgage product for buy-to-let investment, and has gone on to establish itself as a leading lender in this sector, with a market share of 20 per cent.
Andrew Moss, buy-to-let product manager at Mortgage Express, commented: “We have increased our lending balances on buy-to-let loans by 20 per cent over the past year which demonstrates the continuing strength of the buy-to-let sector. High house prices and a growing population have meant that more people are now renting for longer, fuelling the demand for rental property. Amateur landlords who have enjoyed success with one or two properties now have the confidence to further increase their portfolios. Indeed, nearly half of our landlords say that they will look to grow their holding this year.”
Over the past decade the sector has enjoyed exceptional growth, to now represent approx. 8 per cent of total housing stock in the UK. The first mortgage deals were inflexible, commercial style products with high interest rates, up to 4 per cent over Bank of England base rate, and low loan to values up to a maximum of 75 per cent. Historically, rental cover had to equal 130 per cent of the mortgage to protect both the lender and the landlord against voids and the higher risk.
Moss continued: “We’ve come a long way in the past ten years and today’s mortgages are much more borrower-friendly. Rates are more competitive and criteria are more flexible. Landlords now benefit from an average loan to value of 85 per cent, and rental cover now commonly sits at 125 per cent of the mortgage payment.”
The most recent research from Mortgage Express' buy-to-let confidence report carried out in May of this year revealed that 83 per cent of landlords plan to increase or maintain their portfolios in the next six months, showing that the appetite for investment remains. Buy-to-let lending has grown from £3.1bn in 1999 to £24.5bn during 2005. The instability in the world stock markets and the increasing pensions crisis has ensured that more and more investors are turning to bricks and mortar to secure their future and this trend looks set to continue.
Moss concluded: “This is an exciting milestone for both Mortgage Express and the mortgage industry. The past decade has seen more lenders and brokers enter the sector, increasing choice and competition which is great news for the consumer. Looking ahead to 2016, as the market matures it will grow at a more stable and sustainable rate. Product innovation and high service standards will be key in maintaining business levels. Whilst the increasing student, single person and migrant population will continue to support the rental sector, growth in rented households is predicted to be around 3 per cent over the next ten years.”
