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Mortgage approvals surge as landlords look to ‘diversify their property portfolios’

A growing number of buy-to-let landlords are looking to take advantage of cheaper borrowing rates, growing demand from renters, and the existing stamp duty holiday by adding to the property portfolio, new figures suggest. 

Mortgage approvals rose sharply in August to hit their highest monthly level for almost 13 years, fuelled by the and a desire to purchase properties outside Britain’s large urban centres.

Ultra low borrowing rates and the government’s stamp duty holiday on home purchases, due to expire next March, also helped to push mortgage approvals from 66,300 in July to 84,700 in August, according to the latest data from the Bank of England, their highest level since October 2007.

Analysts said favourable market conditions had encouraged more BTL landlords to consider adding to their existing property portfolios. 

David Whittaker, CEO, Keystone Property Finance, commented: “There were no signs of the traditional summer slump this August, with the mortgage market experiencing a ‘mini boom’ and showing positive signs of recovery following an extremely challenging period. 

“Within the buy-to-let market, falling rates, pent up demand and the stamp duty holiday have no doubt acted as an incentive for landlords and investors to take this opportunity to diversify their property portfolios.”

Property buyers at all price tiers are digging deep to come up with a larger deposit to secure a stamp duty saving, and although many lenders may be treading with caution, they continue to make hay while the sun shines, according to Hugh Wade-Jones, managing director of Enness Global Mortgages. 

He commented: “This trend will continue to be driven forward by the high-end market who have far fewer obstacles in their way when obtaining a mortgage but still recognise that investing now makes good financial sense.”

The director of Benham and Reeves, Marc von Grundherr, agrees that there has been little to no let-up in the volume of homebuyers hitting the market despite a tightening of finance options available.

He said: “Where they may have been traditionally buying with a 15% to 20% deposit, they’re now stretching to as much as 30%. They are doing so to not only to take advantage of the favourable rates currently on offer but to secure a stamp duty saving in the process.

“Since the stamp duty holiday was announced, the number of mortgage approvals seen on a monthly basis has more than doubled, and so the boost it has given the market can not be underestimated.”

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