The months between January and October saw good levels of increase, with only a slight decline experienced in the latter two months of the year. Sales peaked in both June and September, reflecting the attractive quarter end developer incentives for landlords and budding property investors.
However the falling levels of buy-to-let purchases in November and December are indicative of a more cautious landlord after the base rate was increased once in early August, and again to hit 5 per cent in the second week of November.
City bonuses and the general Christmas ‘feel good factor’ also pushed inflation levels in December, making even tougher ground for the average investor with bargain properties becoming even harder to find.
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However, LTV amounts remained fairly static in 2006 at between 79 – 82 per cent, with only February and April dropping below at 74 and 75 per cent respectively.
In perhaps an indication of things to come over the next twelve months, these annual levels of LTV were 9 per cent higher than those for residential purchases and 8 per cent higher than buy-to-let remortgages.
Due to the taxable nature of interest payments on investment properties, landlords are keener than ever to borrow as much as possible on their mortgage – making for a smaller deposit and greater spare capital for their next big purchase.
Jonathan Cornell, technical director at Hamptons International Mortgages said: “The housing market remains a good bet for a healthy return in the long run, with developer deals at the end of quarters two and three helping landlords increase their portfolio with real bargains.
“However, last week’s rate rise will allow further anxiety to grow – capitals for deposits will need to increase as borrowing amounts offered by lenders decrease and mortgage repayments rise. Despite this I think the buy-to-let market of established investors will continue to grow throughout 2007 and, in percentage terms, its growth will eventually outstrip the residential mortgage business.”
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