The growing popularity of the UK's buy to let sector has been underlined with news that buy to let mortgages are at their lowest rates ever and more people are investing.
According to Moneyfacts.co.uk, the increasing competition between BTL mortgage providers has grown in recent months with a wide range of products now available at rock bottom rates.
Indeed, there are 811 BTL mortgage products on the market, up from 757 products a month ago.
Mortgage rates for BTL investors drop
The competition has seen a drop of 0.4% in the average fixed rate for a BTL mortgage which is now standing at 3.82% - for all terms – and a record low.
Buy to let investors looking for the lowest average variable rate will find most products being offered at 3.63%, a fall of 0.54% year-on-year.
Moneyfacts.co.uk editor, Sylvia Waycot, said it wasn’t surprising that buy to let is proving increasingly popular with investors looking for better returns than their ‘dire savings rates’.
She added: “This popularity will increase when the rules on pension pot drawdown are relaxed in April.”
Numbers of buy to investors rocket
With savers looking for better returns for their money, it should come as no surprise that buy to let investors numbers have risen by 8% over the past year in the UK, says letting agents Ludlow Thompson.
The firm says there are now 1.63 million investors in the UK.
They've also calculated that net income BTL investors can enjoy, that is rental income with all costs deducted, has also risen by 8% to £13.1bn.
BTL investors in London enjoy the best yields
The letting agent reveals that buy to let investors can enjoy yields of between 5% and 6% in many parts of London on their investment property.
In addition, property investors have seen capital growth of 7% in 2014 for residential properties while in London BTL investors saw property prices grow by 16% last year.
Those are attractive figures, particularly for people with a share portfolio since the FTSE-100 grew by just 0.7% last year.
The chairman of Ludlow Thompson, Stephen Ludlow, said: “Investors wanting to avoid stock market volatility see the high yields on buy to let investment making it one of the few options available.”
Pension drawdown rules will fuel BTL investment
He also pointed out that the rental market in the UK remains a strong investment since many first-time buyers are finding it difficult to get a mortgage.
This means they have to rent for longer and the rental market is remaining strong.
He added that when the pension fund rules are changed more investors will use their money for property investment since the yields are much greater than those for pension funds.
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