Despite uncertainties over the future of the UK Housing Market, the buy to let sector is forecast to continuing increasing in size.
Currently about 330,000 buy to let mortgages are sold per year in the UK, this is forecast to rise to £361,000. By 2011 Mintel forecast the % of buy to let mortgages to rise to 550,00 per year; this will account for 10% of the mortgage market.
Since the early 1990s the buy to let market has been booming and outperforming the standard mortgage market.
Reasons for Increase in Buy to Let Mortgage Sector
- Housing seen as a good investment for retirement. Housing provides both income and capital gains, in recent years the housing market has strongly outperformed other investment options like the stock market.
- People using Capital Gains to reinvest. The rise in house prices mean many homeowners have seen large increases in wealth. This has enabled them to remortgage and buy a second home.
- Increased willingness of Banks and building societies to lend
- Lower Real Interest Rates making buying more attractive.
- Increased Difficulties for First Time Buyers. The increased cost of UK housing means many first time buyers are being pushed out of the housing market, therefore, there has been a buoyant demand from the renting sector. This has maintained the profitability of the buy to let market
Mr Davies added: “The buy-to-let mortgage market has experienced meteoric growth since the late 1990s, outperforming the wider mortgage market over the past few years.