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Categories: property market | buy to let mortgages
Latest statistics from UK Finance, the British trade association for banking and financial services, show a 39.2% increase in the number of buy to let mortgages advanced in Quarter 4 of 2024.
For an industry going through huge turbulence, this is a strong marker of confidence in bricks and mortar investment.
Whilst the report is clear that it is not all plain sailing, as possessions statistics demonstrated, it has been suggested this could mark a resurgence for the sector.
The statistics in detail
In Q4 2024, across the UK, 52,648 new buy to let mortgages were advanced. The total value of these mortgages was £9.6 billion.
This represented an increase of 39.2% in number of mortgages and 47.2% in the value of the mortgages advanced compared with Q4 2023.
Average gross rental yields also experienced an increase. In Q4 2023 this figure was 6.74%, but it rose to 7% in Q4 2024.
In previous years, mortgage interest rates grew significantly, as the Bank of England Base Rate was increased to bring down inflation, peaking at 5.25% in August 2023. The Base Rate has since reduced, currently standing at 4.5%.
Perhaps in light of this, the UK Finance report also brings grass shoots of good news for mortgage interest rates too. Average interest rates recorded across all new buy to let mortgages was down 0.61 basis points in Q4 2024 from the same quarter in the previous year.
The number of fixed rate mortgages in the marketplace has increased by 4.4% in Q4 compared with Q4 2023, whilst in the same timeframe variable rate mortgages reduced in number by 15.9%.
At a time of uncertainty, it makes sense to take a fixed mortgage, to protect against further rises in interest rates, which may explain this trend.
There is a lot of positivity in the UK Finance report, but possessions are always a concerning subject. In Q4 2024, there were 700 buy to let mortgage possessions. Whilst this is the same number as Q3 2024, it is up 29.3% year on year from Q4 2023, which indicates that some landlords have struggled with their property businesses.
Industry reaction
From within the lending community, Russell Anderson, commercial director of Paragon Bank had this to say;
The [UK Finance] data supports our view that landlords are astutely managing their lettings businesses, borrowing to invest in higher yielding properties or refinancing to proactively manage debt across portfolios and improve privately rented housing stock.
While encouraging, this increase is against a low base in 2023 and there continues to be an acute supply demand imbalance in the private rented sector, underpinning rental inflation.
More investment is needed into the sector to meet forecast levels of demand, so we would hope to see the momentum of last year continuing as the market recovers.
On behalf of specialist mortgage broker, Commercial Trust, chief executive Jorden Abbs commented;
Landlords have had to show great resilience over a number of years, with more change still to come.
However, we have seen strong evidence of the ability of property investors to regroup and diversify as is reflected in the positive figures released in the UK Finance report. Incorporation within the sector has helped many landlords maintain strong yields, and I expect to see the spike in those figures continue to rise, in reaction to changes in the holiday let sector too.
The global economy is impacting all walks of life, and mortgage interest rates have risen, but with the Base Rate gradually dropping we can see positive signs for the future starting to appear, with yields going from strength to strength.
Being a landlord has never been a short-term investment tactic, as such there will be fluctuations to overcome, but fundamentally an investment in bricks and mortar is a tangible place to put hard earned funds with plenty of promise on the horizon.
If you are keen to review the borrowing you have on buy to let or commercial property, the team at Commercial Trust are here to help. Simply call on the Freephone number above, or enquire online here.
