UK Mortgage Investment
Why UK Mortgage Investment Is Big Business For Landlords
If you are thinking of getting involved in UK mortgage investment, then now might be a good time. We predict there will still be strong demand for UK mortgage investment products throughout the next 12 months. In the past few months, UK mortgage investment has benefited from a reduction in property values, meaning that landlords have been able to see potential higher returns on any new investment they make. According to figures from mortgage provider Paragon Mortgages (Jun. 08), the average yields of a buy to let property rose to their highest level in more than 2 years with rental yields having risen to 6.4%, the highest level since February 2006.
With landlords being able to benefit simply by owning a property, it is no surprise that so many people are choosing to get into the UK mortgage investment sector. Paragon's figures suggest that in addition to the rise in rental yield, landlords have seen an average of 13.6% overall return on a property purchased 12 months ago. This is a great return for the average mortgage investment, figures which most BTL investors would be happy with.
One reason for the boom in UK mortgage investment is that the private rental sector is growing on the back of migration into the UK. Many migrants from Central and Eastern Europe choose to rent for several years before purchasing a property. This means strong growth in the BTL mortgage investment sector as this inward migration is scheduled to continue. Many landlords believe that the UK mortgage investment sector will grow, or at least remain stable, because of this inward migration. With a large percentage of these migrants expected to enter the rental sector for extended periods, the future looks bright.
BTL Portfolios to Rise
With this in mind, Paragon's research suggests that landlords will take the chance to increase their portfolios by around six per cent. Mortgage investment is seen as a safer way to make some money than stocks and shares, requiring less specialist knowledge. With a bit of advice on letting and refurbishing a property, almost anyone can make good returns on a mortgage investment property. So landlords plan to increase their investment in the coming year.
Meanwhile, lenders are struggling to respond to increased demand for UK mortgage investment products, with recent developments seeing some buy to let lenders shying away from new business. Our own research (Sept. 08) shows that there are in excess of 240 mortgage products still available to landlords.
It is fair to expect, due to the turmoil in the stock markets and falling house prices, that new money will find its way into the buy to let sector. With a reasonable range of mortgage products and good rental demand, it seems that now is as good a time as ever to make a UK mortgage investment.
