The number of mortgage products available for borrowers to choose from continued to increase last month.

According to financial data firm Moneyfacts, there were 1,798 different mortgage products on the market by the start of March, an increase of 6% on a month ago and 68% more than one year ago.

There are still very few mortgages available at 95% loan-to-value, but there has been considerable improvement in the availability of deals at 85% to 90% loan-to-value.

In fact, there are 90% more mortgage products on offer for those with a 10% to 15% deposit than there were a year ago, at 489.

"There are a growing number of mortgage providers who are becoming a little more accommodating with their credit criteria and this bodes well for consumers who will benefit from a growing competitive mortgage market," says Michelle Slade of Moneyfacts.

"It is pleasing to see that the average mortgage rate is falling at the same time as deposit requirements are getting smaller," she adds.

A number of lenders have reduced the interest rate charged on some of their mortgages in the last couple of weeks, including Lloyds, RBS, Cheltenham & Gloucester, Northern Rock and Alliance & Leicester. The cuts have been between 0.1% and 0.5%.

In further evidence that lenders are loosening criteria, RBS has also hiked its maximum advance for first time buyers from £150,000 to £300,000.

"The biggest reductions in interest rates have tended to be at the highest loan-to-value (LTV) levels, at 85% in particular," says Ray Boulger senior technical manager at mortgage broker John Charcol.

"Increasingly in the last few weeks, some lenders have improved their offerings over 75% LTV, which is down to the consideration that it is more commercially viable - the risk is that much less," he adds.

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Yesterday, the CML reported that new buy-to-let lending increased for the second consecutive quarter in the final three months of 2009…

New figures from the Council of Mortgage Lenders (CML) have prompted the National Landlords’ Association (NLA) to express concerns over the imminent regulation of buy-to-let lending by the Financial Services Authority.

Yesterday, the CML reported that new buy-to-let lending increased for the second consecutive quarter in the final three months of 2009.

There were 25,800 new loans advanced, up from 23,700 in the previous quarter but down from 38,000 in the same period of 2008.

Overall in 2009, buy-to-let lenders possessed 5,700 properties and the number of mortgages in arrears declined.

NLA head of communications, Simon Gordon, comments: “It is encouraging to see the total number of buy-to-let repossessions remain a small percentage of the market, at 0.46% of the total book, similar to the annual rate for the residential mortgage market.”

Mr Gordon also believes the figures suggest the buy-to-let market is far more robust than originally feared and urges the Government to take note of this when considering whether regulation is really necessary.

He adds: “Rather than wasting effort on further legislation they should be encouraging lenders to get credit flowing again.”

Meanwhile, Jonathan Moore, director of lettings portal easyroommate.co.uk points out that the rental market changed in 2009, prior to which some landlords were as inflexible with their tenants as they had been in the boom times.

He believes landlords have now “wised up” to the dangers of void periods, and are doing their utmost to keep their properties occupied – even if it means lowering rents.

“As a result, monthly mortgage bills are being met”, Mr Moore concludes.

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Buy-to-let mortgages are starting to return to borrowing limits last seen before the credit crunch…

Before the financial crisis, you could get a buy-to-let mortgage with a 10-15 per cent deposit. But once the credit clampdown started, lenders wanted at least a 25 per cent deposit, and some demanded far more.

While it's still difficult to get a new buy-to-let mortgage, there are an increasing number of lenders willing to dip their toes into the buy-to-let remortgage market.

Fee-free mortgage broker London & Country is offering a three-year fixed rate of 6.49 per cent, with a fee of £995 on a maximum loan-to-value of 80 per cent. The mortgage deal, which is being funded by the Saffron Building Society, means monthly repayments of £1,012 on a £150,000 repayment loan or £811 on an interest-only basis.

Other lenders are also becoming more welcoming towards buy-to-let borrowers. Nottingham Building Society has improved the loan-to-value up to 70 per cent on its buy-to-let mortgage for both remortgage and purchase.

It has also improved the rate - its three-year fixed rate is now 5.59 per cent compared with its previous rate of 5.89 per cent (which went to 65 per cent LTV). On a £150,000 home loan, that means monthly repayments of £699 interest-only or £929 repayment.

David Hollingsworth, of London & County, adds: 'We are seeing the first concerted push to wake up the buy-to-let mortgage market - particularly on lending criteria.'

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“It's a great relief for investors that buy-to-let finance is starting to get to get easier to find. The numbers of loans advanced has climbed steadily for two consecutive quarters, and lenders are gradually loosening their purse-strings…"

David Brown, Commercial Director of LSL Property Services, comments on the CML Buy-to-let mortgage figures. 


He said:

"With so few specialist lenders offering products for buy-to-let investors, mainstream lenders need to cater to the growing demand from investors to play their part in the continuing recovery of the buy-to-let market.”

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The boss of the UKs leading specialist insurance provider to the lettings industry has welcomed the latest FindaProperty Rental Index revealing a rise in asking rents by 1.2% to £814 pcm. But he warned it may not be good news across the board…

The boss of the UKs leading specialist insurance provider to the lettings industry has welcomed the latest FindaProperty Rental Index revealing a rise in asking rents by 1.2% to £814 pcm. But he warned it may not be good news across the board.

John Boyle, Managing Director of HomeLet said: This is promising news for property investment landlords who have endured a difficult 12 months due to an oversupply in stock driving rents down.

Thanks to accidental landlords returning to the sales market the number of available properties is reducing and pushing up rents. Potential buyers are also still struggling to meet the current mortgage requirements, especially the requirement for a minimum 20% deposit, so demand for rental property is strong.

However he also warned that unless restrictions on buy-to-let lending are relaxed we could see a reverse of the situation last year and the UK could experience a surge in the number of reluctant tenants coupled with a severe shortage in housing.

The February FindaProperty Rental Index recorded the highest increases in rental asking prices in the north of the UK. However, HomeLets own rental index of actual rental prices achieved shows increases in the south and decreases in most northern areas.

According to HomeLet the areas north of London where rents rose in February were in metropolitan areas such as Birmingham and Newcastle. Everywhere else including Scotland stayed the same or dipped.

HomeLets rental index shows property in the south represents a particularly good opportunity for cash-rich investors, said John. Also with house prices creeping up first-time buyers, particularly in the south, will continue to struggle to get a foot on the ladder.

This could result in longer tenancies in non-student areas much like those seen on the continent. This is a positive for landlords and tenants as it gives both parties increased stability.

As the number of people in the UK renting homes increases letting agents could face even more competition in 2010 as new letting agents open up looking to cash in on the expanding market.

In order to remain profitable letting agents need to get ahead of the competition by providing high standards of customer service, joining professional bodies such as ARLA and the NALS and expanding their offering to clients, said John.

As the recent ARLA Members Survey has shown tenants are still struggling to pay their rent, meaning landlords continue to be at risk of rental arrears which could force them to default on their mortgage repayments and ultimately result in the property being repossessed.

By offering clients Rent Guarantee protection in addition to other specialist tenant and landlords insurance products and services letting agents can add value to their services and differentiate their business from their competitors.

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Residential property has been a better investment than cash, shares or bonds over the past decade, in spite of significant falls in house prices between 2007 and 2009, according to Halifax research…

UK house prices were up 105 per cent in the 10 years to December 2009, while buy-to-let landlords could have made total returns of 187 per cent including rent, said the biggest mortgage lender.

Halifax’s buy-to-let performance is based on the original value of the property and includes a 33 per cent deduction from gross rents to cover costs.

However, landlords with mortgages would have been able to make even higher percentage returns compared with the deposit they committed.

Precious metals, up 242 per cent over the decade, were the best-performing asset class, according to the research, but UK shares, cash and bonds all trailed property.

Martin Ellis, group economist at Halifax, said: “Property has still delivered good long-term gains despite recent turbulence.” But the poor performance of UK shares, which registered one of their worst decades ever, would “make people think harder whether they want to invest in equities”, he said.

The UK stockmarket was only up over the decade on a total return basis including dividends. But with inflation totalling 30 per cent over the decade, investors still failed to make a real return.

Gold soared 277 per cent, while commodities were up 137 per cent to end-2009. “Precious metals were the top performing asset during the Noughties, reflecting increased demand from China and India for industrial uses and jewellery, “ said Halifax.

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The first UK online property auction has been hailed a success, with 57 properties sold in the days running up to the auction and during the live online bidding process over the weekend.

The auction closed on Sunday 14th February.

Property website Zoopla.co.uk, which hosted the auction, has confirmed that it is to hold further weekly online property auctions on its website from February 25th.

Online property auctions have never been held before in the UK, and there had been speculation regarding whether Britons would be comfortable and confident enough with the internet as a medium for making such large ticket purchases.

Zoopla reported that over 75,000 people visited its auction site and more than 1,000 potential buyers registered for the first auction.

The numbers seem to indicate that the UK may go the way of the US, where online property auctions have really taken off in the last two years.

Bidders in the first Zoopla.co.uk online auction ranged from first-time buyers to experienced property investors, with the types of properties on offer including studio flats priced at £30,000 to a farm in Lancashire which went for £750,000.

The average value of a property bought at online auction was £104,000.

Zoopla.co.uk has initially focused on repossessions, but it intends to roll out the service to include any property on the books of the estate agents that sign up.

Zoopla.co.uk has launched its auction venture in association with REDC, the world’s largest property auction firm, which currently sells over £600m annually via its online auctions in the US.

Online auctions will now be held weekly from Feb 25th at Zoopla.co.uk/auctions, starting every Thursday afternoon and closing on Sunday evenings.

Alex Chesterman, chief executive of Zoopla.co.uk says:

“With over 50 properties being sold last week as a result of our online auction process, we are very encouraged by the potential of the online model and it clearly signals the appetite of both buyers and sellers to transact in this transparent way.

"We see this as one of the most exciting developments in the UK property market in some time, which benefits buyers, sellers and agents alike.”

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Yields on buy-to-let property fell to 4.75% in January, the lowest level since August 2008, as rents fell and property prices continued to increase. However when house prices reached their lowest in March 2009, yields peaked at 5.1%…

Rents have fallen for the fourth consecutive month, falling 0.5% in January and are now 2% lower than in September 2009. In contrast house prices are 3.3% higher.

Total returns for buy to let landlords in January, which combines rental income and house price growth, were 16.7% on an annual basis. The average landlord made £27,500 on a typical property between January 2009 and January 2010 with almost £20,000 of this in the form of house price inflation.

This fall in rental yields came just after the stamp duty holiday where property investors rushed to purchase properties in order to benefit from this. This increase in supply of rental properties has pushed rents lower.

The beginning of the year is usually a quiet month in terms of tenant demand so this increase in rental properties has meant landlords have had to cut rents in order to avoid their properties becoming unoccupied.

This may become a problem if house prices become too expensive and rents remain low, as the lower rental yields landlords receive may not be enough to cover their mortgage repayments.

David Brown, commercial director of LSL Property Services warned landlords to ensure a healthy mix of income and capital appreciation to avoid mistakes of the past.

Total returns look very enticing at present as house price increases contribute a larger share of a landlords profit. Over the long term, investment in buy-to-let must be underpinned by a strong yield.

It is important for landlords to take out the appropriate landlord insurance policy in order to protect themselves and their properties.

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Hot on the heels of the Nationwide Property survey which suggested a 10% to 15% increase in UK property prices in 2010, the Halifax survey is very different…

Hot on the heels of the Nationwide Property survey which suggested a 10% to 15% increase in UK property prices in 2010, the Halifax survey is very different. After revealing that house prices grew by just 0.6% in January 2010, against a six monthly average of 1.1%, there are growing fears that more properties will be brought to market which will see pressure on prices.

Even though the recent closure of the Bank of England's quantitative easing program will impact upon liquidity it will also ensure that UK base rates are likely to remain at 0.5% for a further prolonged period. This will obviously assist with regards to mortgage rates and competition in the sector but if more properties become available and mortgage lending does not increase then we will see more downward pressure on prices.

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