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More people are looking to take advantage of the vibrant buy to let market despite lenders restricting deals and asking for larger deposits.

Lee Grandin, director of Landlord Mortgages, feels that the current yields available from both residential and commercial lets means that people will find a way to jump over any hurdle which is presented to them during the buying process.

"The rates aren't putting people off because the yields are good. It is just a case of whether they do physically have enough funds to purchase a property because the deposits are quite substantial," he said.

"It is a very attractive market if someone has the money for a deposit. It is not a market where those that aren't asset-rich can purchase; you do need to have some kind of resources because the deposits are still quite significant."

He added that while buy to let rates are not as competitive as they were five years ago, property investors have accepted this and become more savvy about weighing up their options.

Affording a mortgage is at its easiest level for more than 14 years, the Halifax has claimed.

New research conducted by the bank has found that the average monthly repayment made by a first time buyer is now at its lowest level since 1997.

The average payment now accounts for 27 per cent of a first purchaser’s monthly income compared with a peak of 47 per cent in October 2007 and has not been lower since the days when the likes of the Spice Girls and Oasis ruled the charts.

However, there is still a great north/south divide. On average Londoners spend 35 per cent of their income on mortgage repayments while in Yorkshire and the north-west the figures stand at 21 per cent and 23 per cent respectively.

Martin Ellis, housing economist at Halifax, said: "The falls in house prices and cuts in mortgage rates in the last few years have resulted in a significant improvement in housing affordability for those able to raise the necessary deposit to enter the market.

“Mortgage payments for a typical new borrower are now at their lowest in proportion to earnings since 1997.”

A recent study by Barclays found that its average customer pays out 15.4 per cent of their income towards servicing their mortgage.

For the 34th month in succession, the Bank of England’s Monetary Policy Committee (MPC) held the UK base rate of interest at its record low level of 0.5 per cent.

It’s good news for people who are current enjoying low variable rate mortgages, such as trackers or discounted products, but for those looking to take a new deal things are not as good as they could be.

Largely, banks and building societies raise their funds at rates through what is known as intermediation. This is the process of financial institutions pooling funds for lending between themselves with the Bank of England’s rate having little bearing on the amount of interest charged.

The cost of lending for banks and building societies has risen in recent months and the knock on effect is that tracker deals are now coming under different pricing structures.

But Ray Boulger of the independent mortgage broker John Charcol has raised concerns that the changes in the market do not reflect the price hikes that have been put into force.

"Six months ago three month Libor was 0.83 per cent and the cheapest lifetime tracker rates on offer from two of the most competitive lenders, ING Direct and Woolwich, were Bank Rate + 1.89 per cent and Bank Rate + 1.97 per cent respectively.

“Today three month Libor is just 0.26 per cent higher at 1.09 per cent but the cheapest lifetime tracker rates from both these lenders have shot up by over one per cent, with no change in the arrangement fees or maximum LTV.

However, there is good news for people looking for products that offer more security as a large number of fixed products are now available at lower rates than they were a few months ago.

MyMortgageDirect recently told potential first-time buyers that there is a wealth of good mortgage deals out there if they are prepared to put the time into searching the market.

Despite housing minister Greg Shapps calling on mortgage lenders to offer longer term products, one leading expert says the possibility of attractive 30-year fixed rates is unlikely.

At the Building Societies Association's annual mortgage seminar, Mr Shapps suggested that lenders should consider offering longer fixed mortgages in order to encourage a more buoyant housing market.

But Ray Boulger, senior technical manager at John Charcol, believes the housing minister's comments are little more than a pipe dream.

He said: "At the moment, Grant Shapps's timing is not good because a lot of lenders will actually have difficulty funding a long-term fix. With the wholesale markets being as difficult as they are, to secure long-term funding would probably be a bit problematic for certain lenders."

He added that such products would be unlikely to be popular because the length of such a fixed deal would likely carry an unattractive interest rate.

Figures released by the Office for National Statistics earlier this month showed that property prices paid by first time buyers in August were 1.8 per cent lower on average than they were in the same month in 2010.

People who need to secure buy to let funding in order to expand their portfolio might be pleased to hear that average mortgage rates have fallen in the last 12 months.

Research from Defaqto revealed that the average two-year fixed rate for a buy to let mortgage at 75 per cent loan to value has dropped from 5.78 per cent in September 2010 to 4.86 per cent last month, while three-year product have seen average rates fall to 5.56 per cent from 6.03 per cent last year.

However, those looking to buy flats and houses for sale in Mapesbury, London, in order to rent to tenants will still find a buy to let mortgage is significantly pricier than an equivalent residential mortgage.

Defaqto insight analyst for banking David Black commented: "People should factor mortgage fees into their calculations as, like the interest rate, they tend to be much higher for buy to let mortgages than for residential mortgages, and can make a real difference to the overall cost of the mortgage."

Buy to Let Investment News
 

Prospective homeowners who have been keeping an eye on UK mortgage rates should not be put off by a five-year mortgage.

This is the view of Jane King, mortgage advisor at Ash-Ridge Asset Management, who told the BBC Money Box podcast that such a loan could provide peace of mind.

"If you are not planning to move or if you feel that there are going to be significant changes to your circumstances, whereby you'd like to go for five years without worrying, then a fixed rate might be right for you."

She noted that five-year UK mortgage offers have become much more competitive in the last few months, so those looking to move house could find an advantageous deal for themselves.

Private Finance director of communications Melanie Bien agreed with Ms King's comments, adding that more people are turning to fixed rate mortgage products because they are starting to worry about rising interest rates in a couple of years' time.

Mortgage Rate & Home Loan News
 

If residential mortgage rates remain at their current low levels, there may not be an increase in the number of homes being repossessed, according to What Mortgage.

Editor Ben Wilkie noted: "I think that is one of the reasons why we haven't seen that many repossessions over the past couple of years despite the worsening economic climate." !!!!

Meanwhile, the Financial Services Authority has revealed that the number of new arrears cases in the second quarter stood at 35,700, four per cent lower than the same period of 2010 and essentially unchanged from the first three months of this year.

Its figures also showed the number of new repossessions in the second quarter of 2011 fell by one per cent to 9,494 in total.

"If people are in trouble then there are options available to them. One of those options is to go interest-only, and an interest-only mortgage is costing you virtually nothing with a tracker or variable rate deal," Mr Wilkie pointed out.

Investment Finance News
 

Potential homeowners who are interested in UK mortgage rates should be warned that current tracker rates are not as good as they have been led to expect.

This is the opinion of Ben Wilkie, editor at What Mortgage, who explained: "The problem is that if you had taken out a tracker three or four years ago, then you would be having an absolutely brilliant rate now, but because of the way that mortgages are priced, they are actually not quite as good as people may think they are."

However, fixed-rate products boast more competitive rates because most people do not expect interest rates to rise by much any time soon.

"If you took out a three-year fixed mortgage and expect interest rates not to rise for a year, then you might be paying over the odds in the first year and then paying under for the next two," Mr Wilkie pointed out.

Meanwhile, Bank of England figures reveal that the number of UK mortgage offers made in July was higher than the previous six-month average.

Mortgage Rate & Home Loan News
 

Buy to let mortgage lending appears to be more widely available now, but equity rates still remain relatively high.

This is the opinion of Alan Ward, chair of the Residential Landlords Association (RLA), who commented: "As well as this, some lenders are adding strange conditions, like LHA [local housing allowance] tenants are only allowed if payments are made to the tenant - which is contrary to RLA arguments and many tenant organisations who believe direct payments to landlords are safer."

He also noted that many landlords are opting for fixed-rate UK mortgage offers because rates can only go up from the present levels, which will happen when the Bank of England's Monetary Policy Committee decides to raise the base rate from its current standing of 0.5 per cent.

Mr Ward's comments came after haart announced that demand for buy to let funding has increased to 16.8 per cent this month, up from 10.9 per cent at the start of the year.

Buy to Let Investment News
 

First time property buyers should make full use of their Isa allowance as well as any other investment options available to them, according to PricedOut.

Matt Griffith, spokesman for the campaign, noted: "With interest rates so low, the main way that first time buyers are going to save their deposit is through putting chunks of saved money aside monthly, rather than expecting interest payments to do the work for them."

Living frugally is one way to set aside the pennies and pounds, while some people might find moving back in with their parents is the best way to save up money for a deposit on their own house or flat.

"First time buyers should also start asking their MPs why the UK has failed to provide cheaper housing for the younger generation. How we get back to providing good homes that people can afford without sacrificing huge amounts of their income is a question we need to start asking ourselves," Mr Griffith added.

His comments came after the Countryside Alliance reported that local authorities have failed to meet provisional targets for affordable housing by 76 per cent on average in the last 12 months.

First Time Property Buyers News
 

Landlords who are considering entering the buy to let market might be concerned by the rise in specialist mortgage rates.

According to a survey by the National Landlords Association, 89 per cent of landlords would be negatively impacted by a rise of two per cent in interest rates, while 80 per cent might have to reconsider their future as a landlord.

David Salusbury, chair of the organisation, commented: "These statistics show how important it is for a landlord expanding their portfolio to construct a sound long-term business plan when considering buy to let properties."

While such a portfolio can represent a worthwhile investment and help ease the housing shortage by providing much-needed rental properties, "landlords should ensure that they plan for the future and are mindful of any potential increases in buy to let interest rates", Mr Salusbury added.

Meanwhile, the Bank of England's Monetary Policy Committee has decided this week to keep the base rate at 0.5 per cent for the whole of August.

Investment Finance News
 

Although the current state of the mortgage industry suggests buy to let is making a comeback, it could just be propping up house prices in general, IPINGlobal.com has stated.

Peter Mindenhall, researcher at the company, commented: "As interest rates rise, we will likely see a rise in defaults because the money at a consumer level simply is not there to support the need to raise rental prices, due to rising unemployment and lack of wage increases."

His remarks came after LSL Property Services reported that rents hit a record high last month, exceeding the £700 a month average for the first time.

Annual rent inflation was calculated to be running at 4.1 per cent in June, although tenant arrears fell 18 per cent as the total amount of rent due or unpaid dropped from 11.5 per cent to 9.3 per cent.

Mr Mindenhall urged people not to base their opinions of the market solely on regional average pricing, however, as this can be "incredibly misleading".

London Property Market News
 

Prospective first time property buyers might be glad to hear that the UK mortgage lending market could now be improving.

Andy Pratt, chief operating officer at Alexander Hall, commented: "We have got past the conservative part of the post-credit crunch and lenders are now keen for more business.

"If the market is stagnant or only increasing slightly, then it is down to being competitive in terms of getting more market share, so they have dropped their rates considerably from where they were a year ago in order to be able to gain more business," he explained.

Remortgaging activity is also on the price, with lenders offering increasingly competitive rates to try to attract customers away from existing deals, Mr Pratt added.

His comments came in light of Council of Mortgage Lenders figures, which showed that the number of UK mortgage offers made to property buyers in May increased by 1.7 per cent compared with the previous month.

Mortgage Rate & Home Loan News
 

Landlords who are considering expanding their buy to let portfolio might be in for some good news as finance appears to be becoming easier to secure.

This is the view of Perran Cooke, mortgage consultant at Countrywide, who commented that there are now more landlords coming in to increase their number of rental properties, particularly in city centres.

"The arrangement fees are still quite high for a lot of the buy to lets, but you are finding that the … amount of lending is increasing," he noted.

"The fixed-rates are getting a lot longer, so you do find that it is more of a buyer's market for buy-to-lets at the moment."

Mr Cooke added that those who are trying to arrange buy to let funding should think about whether the property they are after is rentable, is in a desirable part of the city and which sort of people it is going to suit.

Buy To Let Investment News
 

UK mortgage lending by mutuals was up 20 per cent year-on-year in May 2011, with gross lending reaching £1.8 billion, research has showed.

A report from the Building Societies Association found the number of approved UK mortgage offers increased by 15 per cent between May 2010 and last month.

Adrian Coles, director general of the organisation, commented: "Both gross lending and approvals by mutuals have been stronger in the first five months of 2011 compared to the same period last year.

"Although activity in the market is still considerably weaker than pre-crunch levels, mutuals have been increasing their mortgage lending," he noted.

Meanwhile, the Council of Mortgage Lenders has welcomed the Scottish government's pledge to fund the development of a mortgage indemnity scheme for new build properties.

The body said the support was "promising" at a time when constrained conditions continue to affect the housing and mortgage markets in the UK.

Mortgage Rate & Home Loan News
 

Individuals who are looking to expand their buy to let portfolios may find the situation is not the same as it was before the recession.

Malcolm Harrison, an independent property industry expert, explained: "A buy to let mortgage lender is going to want a larger deposit than they wanted three or four years ago. But that is an overall thing in the market, whether it is owner-occupation or buy to let."

He noted that while there are more buy to let funding options on the market at the moment, most lenders tend to favour "the more mature financial investor".

Mr Harrison's remarks come in light of the National Landlords Association's call that buy to let mortgage products must be sustainable in order to boost the recovery.

Richard Price, director of operations at the organisation, posited that the market has "learned from the past" with regard to unsustainable UK mortgage funding options.

Buy to Let Investment News
 

A dearth of UK mortgage lending options contributed to the lack of a spring bounce in the housing market, according to figures from the Royal Institution of Chartered Surveyors (RICS).

Its latest UK Housing Market index revealed the average number of completed house sales per surveyor dropped by 3.4 per cent to 14.7 in the three months to May 2011, which is the lowest average since January.

The sales to stock ratio also declined to 20.6 per cent, significantly below the long-run average of 33.5 per cent.

RICS housing spokesperson Ian Perry commented: "Buyer interest in purchasing property remains flat across much of the country and there is little sign of this changing any time soon.

"Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand."

However, those with property to rent in London and other parts of the country could benefit from the growing "appetite to rent".

London Property Market News
 

News that the Bank of England has held the base rate at the record low of 0.5 per cent for the 27th month in a row could have a bearing on the type of UK mortgage offers made to prospective house-buyers.

According to Andy Pratt, chief operating officer at Alexander Hall, "if the [interest] rate rise doesn't happen then people are going to feel - whether it is a reality or not - less troubled and more confident about their [mortgage] position".

He noted that the "key factor" is inflation.

"There is a lot of press comment out there at the moment – from the Bank of England and others – that inflation is going to quite naturally jump down, but we have got to see it happen."

If that happens, Mr Pratt believes it is unlikely those looking to secure UK mortgage lending funds will see a rate change for "quite a long time".

Mortgage Rate & Home Loan News
 

First time property buyers still face problems in securing UK mortgage offers and there is little to suggest lending will increase this year.

This is the view of Ray Boulger, senior technical manager at John Charcol, who was surprised that the Council of Mortgage Lenders (CML) increased the forecast for gross lending from £136 billion to £140 billion this year.

However, he was unsurprised by the organisation's net UK mortgage lending prediction.

"I think the [CML] forecast of an increase in net lending from £6 billion to £9 billion [in 2011] makes good sense. But frankly I am surprised that they forecast net lending to fall as low as £6 billion in the first place," he commented.

"The wholesale markets are beginning to recover, albeit still fairly slowly."

The CML also predicted gross mortgage lending will rise to £150 billion next year, which could help more first time buyers secure finance to purchase a home.

Mortgage Rate & Home Loan News
 

Prospective house-buyers who have been keeping an eye on London property prices have been given advice about which mortgage product is the best value.

Ray Boulger, senior technical manager at John Charcol, told the FT Money Show podcast that UK mortgage offers with variable rates might provide better value for homeowners as he believes rates will rise more slowly than the market.

"Clearly, everybody will have their own view on that and if you do want to buy security, then if you only buy that security for two years, you're buying it for a period when you least need it because rates are clearly not going to go up very quickly," he pointed out.

"Whilst there will be some people for whom a two year fixed rate does make sense […] for the majority of people, I don't think a two year fixed makes sense."

Mr Boulger added that either a lifetime tracker or a five year fixed product will work best for most people.

Mortgage Rate & Home Loan News