Buy-to-let plans to increase house prices as landlords take benefit of low rates

Landlords are heading into the housingbuy to let mortgage market, with the buy to let mortgages growing at more than four times when compared to the first time buyer mortgages.

Banks and Building societies gave out £1.6bn of loans to landlord buying property in the month of July, which is up by 33pc on the same month of year 2014, according to the Council of Mortgage Lenders (CML).

On the contrary, first time buyers have borrowed £4.6bn and which is up by 7pc on the year. And the home owners who move out to new property took out a further £7.6bn in home loans, up by 10pc on the year.

As there is limited supply of properties in the market, the competition to get buy to let properties is the reason likely to put up house prices. There is a steady increase in buy to let remortgages too, as the existing home owners and landlords want to get themselves in a new deal before the interest rates are up.

In July 2015, a total of 11,800 landlords borrowed to buy a property wherein, July 2014 9,300 but to let loans were given out. According to the CML’s director, the rise in purchase is caused by the healthy state of the economy.

There has been a steady growth in house purchase and buy to let in the market over the last months with improvements in economic factors across UK, allowing more people to enter the property market.

According to Economist Howard Archer, the lending numbers indicate house prices would get accelerated in the coming months. And the house prices are expected to be risen up to 7pc in 2015. There lies a risk too in the forecast, due to the shortage of houses on the market.

The housing market activity and prices are expected to be forced by even more stretched house prices to earnings of ratios, checking of potentially high mortgage borrowers by lenders and there comes the gradual start of increase in rates.

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