Mortgages For Business launches index

The index tracks BTL loan size, property value, loan to value and yields and focuses on the previously unreported sub-sectors of the more complex buy to let mortgage transactions, specifically Houses in Multiple Occupation and multi-unit freehold blocks. Results will be published quarterly based on transactions carried out via Mortgages for Business in the previous three months.

Speaking about the new index, David Whittaker, managing director at Mortgages for Business said:

“Client feedback throughout last year indicated that active professional landlords and residential property investors are keen to understand more about market dynamics and key trends. While they read journals and articles from the Council of Mortgage Lenders and other sources, they believe that the data is too general and historic by the time it is collated and analysed.”

Results from the first index however, published today, give a snapshot of the market in 2010 and reveal that yields for Houses in Multiple Occupation were 8.7 per cent – almost double those of the more ‘vanilla’ buy to let properties. The average loan size for an HMO property was £287,800 with a loan to value of 61 per cent.

In contrast, the average loan size for multi-unit freehold blocks was higher, at £470,900 with a loan to value of 57 per cent. The average yield was 5.7 per cent, lower than for HMO properties but still a better return on investment than vanilla buy to let purchases.

Rob Lankey, managing director of Commercial Mortgages at Aldermore Bank, welcomed the launch of the index saying: “Mortgages for Business has shown real initiative in taking a lead in providing timely and relevant market data against which we can measure our own activity in those key areas of HMO and multi unit freehold lending. The more data any lender can access on market segments, the more confident that lender will be about its lending appetite for that sector. MFB is to be congratulated on the quality of the output data and we look forward to the results of their next quarterly review”.