The number of buy-to-let investors has increased by 50% since last month as a result of a buoyant rental market and may also be linked to pension reforms regarding sipps, reserach reveals.
Mortgages Direct has released index figures suggesting the number of buy-to-let investors in the market is climbing as 12% of people seeking mortgages last month required buy-to-let mortgages compared to just 8% the previous month.
Peter Gladdy, director of Mortgages Direct, says: “The rental market is fairly buoyant in this current climate, with many potential homeowners sitting on their hands waiting to see which way the prices will go and therefore opting to rent instead.”
Although there is no firm evidence to prove it at this stage, Gladdy also suggests the sudden increase in buy-to-let investors could be linked to new pension reforms.
“The imminent changes to Sipps, where residential property will soon become a valid Sipp investment, are already boosting the number of buy-to-let mortgages, as investors are realising the opportunity to increase their pension funds,” he says.
The researhc also suggests first-time buyers are reluctant to enter the market, as the number of people looking for a first-time mortgage decreased by 6% in September.
Mortgages Direct notes despite the drop in interest rate levels to 4.5%, an increasing number of borrowers are now opting for fixed-rate deals while tracker mortgages saw a decrease from 10% to 4% since last month.
It also says the number of people opting for interest-only repayments on their mortgage has increased by over a third from 19% to 31%.
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