Buy to Let Mortgage Rates are on the Rise but so are Rental Yields

30 July 2012 Categories: News

Buy to Let Mortgage Rates are on the Rise but so are Rental Yields

Research conducted by The Business Mortgage Company has shown that the interest rates on both fixed and variable buy to let mortgages are slowly rising, but rental yields are generally increasing at a quicker rate.

The second quarter of this year saw the average variable rate for buy to let products increase from 4.07% to 4.10% – a small rise but possibly an indication of larger rises later in the year.

Similarly the average fixed rate has increased from 4.82% in the first quarter of the year to 5.06% now (July 2012).

It seems however that the number of high LTV mortgage products now available to investors is increasing at the same pace as the interest rates, with a large number of lenders introducing 80% LTV products over the last 12 months. A few have even gone as far as to introduce 85% LTV products which shows the strength of the private rental market at present.

In addition, rental yields have also increased in line with interest rates, rising from an average 6.29% in quarter one of this year to 6.6% in quarter two. Demand for private rental stock is still high across the country and it is thought that yields could continue to increase over the coming months.