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Category: buy to let mortgages
The start of 2025 brings good news for landlord investors, as signs of a strong buyers’ market kicks off the year with a bang.
Property portal, Rightmove, shared news of a record breaking Boxing Day frenzy of new sales, up 26% on activity in 2023, which had been a record year at the time.
Painting a picture of the properties coming onto the market, 46% were three to four bedroomed homes, 35% were entry-level properties typically aligned with the first time buyer market and 18% were the opposite end of the spectrum – the largest homes available.
Of course it must be acknowledged that landlords may be amongst the sellers.
Regionally, the busiest areas of the country were, in first place, the South East, in second, the East of England and in third place the South West, all of which are areas typically associated with higher value homes.
Prospective buyer activity was also up 20% on Boxing Day 2023, and the portal website also experienced a peak in traffic which exceeded a previous high in 2021.
Whilst January is commonly a busy time of year, these statistics indicate a particularly healthy start to the year with a number of records broken.
Gross mortgage lending predictions for 2025
The good news does not stop there. The Intermediary Mortgage Lenders Association (IMLA) has shared predictions for a boom in gross mortgage lending, not just for the year ahead, but for 2026 too.
In 2025, IMLA predicts a 16% rise in gross mortgage lending, from £237.5 billion in 2024 to £275 billion. What’s more, they go on to predict a further 11% increase in 2026, taking the £275 billion prediction up to £295 billion.
The split between remortgage and purchase activity is expected by IMLA to be as follows. In 2025, purchase lending is expected to represent £177 billion of the £275 billion total, and remortgaging to sit at £88 billion.
What will drive the increase in mortgage lending?
IMLA reports that a lowering of mortgage interest rates and an improvement in mortgage affordability will be the levers that drive such big increases in mortgage lending.
Indeed, further reductions in the Base Rate are expected from the Bank of England in 2025, but we have all been cautioned to expect gradual changes.
IMLA references that the UK economy has begun to settle, after the disastrous Truss-Kwarteng mini Budget that set the UK reeling in 2022. They discuss that a new normal is clearer for mortgage interest rates, and underline a key message for property investors – mortgage interest rates will not return to the extreme lows in the decade prior.
In 2020, the Bank of England brought the Base Rate down to an unprecedented 0.1%; in 2021, buy to let mortgage rates started from 0.99% per year, but those times are far behind us and highly unlikely to return.
As rates recently peaked, landlord investors were subject products averaging 5-6% per year, which naturally came as a shock for those exiting rates of (perhaps not 0.99%) but very possibly 1-2%.
As we move into 2025, a far more realistic average of 3-4% is anticipated by IMLA, and with a tempering of rates affordability could soften, meaning those mortgages set to expire this year will have a much gentler landing.
Buy to let predictions from IMLA
Speaking specifically about the buy to let mortgage market, IMLA predicts a 14% increase in lending to £38 billion for 2025, and a further jump up of 11% in 2026, to £42 billion.
So, whilst 2024 has been a tough year for landlords, 2025 looks brighter. Property investors, alongside residential buyers, also look set to enjoy mortgage rates coming down and affordability improving.
IMLA certainly seem to suggest that landlords can start to unbatten the hatches and start looking to the horizon for sunshine.
Speaking on behalf of IMLA, Kate Davis, executive director had this message for landlords:
Buy-to-let landlords continue to face the challenge of increased regulation and higher taxes and will be looking to run their property businesses as efficiently as possible. Many will rely on professional guidance in this endeavour.
As a specialist in property investment financial solutions, the team at Commercial Trust is perfectly placed to provide the professional guidance Davis references. Call on the Freephone number above to start a conversation with our advisors.
