It has been claimed that a rising number of buy to let buyers are coming onto the market and that this is resulting in an even greater number of first time buyers being ousted from the market. There have been signs of improvement in the property market of late, but it appears that those benefitting the most are investors who are buying to let.
According to reports banks are far more keen to lend to buy to let investors compared to first time buyers for a number of reasons. Buy to let investors often have a lot of experience in the market, they have proven credit history and records, and they usually have a meaty deposit to put down, all of which helps to reduce the risk to banks. Many first time buyers, on the other hand, have little in the way of deposits, are purchasing property for the first time, and sometimes have little in the way of credit history. All of this equates to a higher risk for the banks.
The high demand for rented property, which has soared over recent months, has added to the interest in buy to let mortgages, with many people preferring to plough their money into property investment where they can make a good return on their cash rather than putting it into savings where they get little or nothing in returns in the current climate.
Tags: business, Business Finance, time, fact, council of mortgage lenders, first time buyersOne official said: ‘Lenders are making no secret of the fact that they would rather allocate the limited funds they do have to the lower risk option of buy-to-let loans, with deposits of 25-40%, than first-time buyers loans with 90% loan to values. As a result, the buy-to-let sector is recovering at a remarkable rate, as investors are drawn back by the need for a long-term, low-risk investment for their cash.’