BTL borrowers average 100k in equity

The report suggested that equity gains from rising house prices are helping borrowers in the BTL mortgage market access better interest rates as they investigate a new purchase or refinancing their existing deal.

Using data from over 250,000 monthly product searches via price comparison and broker websites, the data shows the average property value among BTL borrowers remained constant at just under £230,000 from Q4 2013 to Q4 2014.

However, having more equity behind them means the average loan to value (LTV) deal sought by BTL borrowers therefore dropped from 62.2% to 56.5%. This increases their chances of securing lower rates as they represent a more secure prospect to lenders.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “These findings show that landlords are in an especially strong position to use their recent equity gains to negotiate a better mortgage deal. House prices have settled into a steadier pattern in recent months, but the current low rate environment offers many BTL borrowers the chance to reassess their finances.

It means this part of the market is likely to see strong activity this year, both from people who are already involved with BTL and others who are learning the ropes. A number of mainstream lenders have increased their BTL offer already and new entrants have also arrived to boost competition.

Lending to landlords is still a modest part of the wider mortgage market, but in terms of percentage growth¹, it outstripped lending for house purchases and remortgaging last year. There are certainly no signs of BTL losing its appeal.”