With all the bad news surrounding the housing market, there is one group of buyers that is beginning to return to the market – buy-to-let investors. Figures recently released indicate that more mortgages were written in August 2011 than in any other month since May of the previous year.
This is directly attributed to buy-to-let investors slowly returning to the market in the UK although the number of mortgages being written is still significantly lower than the average a few years ago. In fact, numbers are 66% lower than the monthly average was in 2007. Whether or not this is the beginning of an upward turn for the housing market is yet to be seen.
According to the statistics director for the Building Societies Association, banks are reporting that this increase in the number of mortgages being written is due to buy-to-let investors feeling a bit more confidence in the market. He feels that households are not ready to accumulate more debt and investors are looking for somewhere to sink their investments until conditions improve in trading. This is seen as a safer haven for their capital investments.
Furthermore, the BoE reported earlier in the week that it is higher rents which are attracting investors in the buy-to-let market. Although the overall housing market is weak, a small portion of investors are seizing the opportunity to take advantage of lower house prices and interest rates.
In terms of market conditions on the whole, the only sectors seeing a small increase in net lending within mining, agriculture and construction sectors. Consumers are being cautious and the trend is towards repaying debt rather than taking on new.
First time home buyers find it difficult because of higher deposits being required even if home values and interest rates are down. Second time buyers are often stuck in a home with negative value so that leaves the door wide open for investors of buy-to-let properties to take advantage of these lower home values and even lower interest rates.
