Over two-thirds (70%) of all buy-to-let applications in December were for mortgage products under 75% loan-to-value (LTV) – a 23 per cent increase compared with the previous month, indicating that 2007 could well continue to be popular for the buy-to-let market.
The bank has seen a month on month rise in overall buy-to-let applications since it entered the specialist mortgage arena six months ago. In December, it saw a 25 per cent increase in applications compared with November.
The average deposit raised by investor landlords was also up by over £1,500 in December compared with the previous month. Those opting for an A&L buy-to-let mortgage under 75% LTV put down an average deposit of over £82,000 – 36 per cent of the average purchase price for this type of mortgage.
The figures also highlight that the majority of investor landlords want fixed mortgage repayments, with two- or three-year fixed rates comprising over three in five (61%) of products sold. This is down on November when they comprised 69 per cent - highlighting that more landlords are now beginning to take advantage of lower priced Base Rate tracker mortgages.
Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, said: "We are continuing to see an increase in buy-to-let applications, with figures on an upward trend right up until year end. This seems likely to pave the way for solid growth into 2007 for this market. Investor landlords are seeing a very buoyant buy-to-let market, with the average property purchase price in December at £230,806 – 24 per cent higher than the average UK house price in 2006, which stood at £186,035."
Yousefi continued: "In a rising Base Rate environment, figures show that some investor landlords are beginning to opt for Base Rate tracker mortgages, which are competitively priced at between 13 and 38 basis points below fixed rate mortgages. While trackers may not be right for amateur letting investors, many professional landlords are in the fortunate position to be flexible with their finances and able to withstand fluctuations in the Base Rate."
