Demand for buy-let mortgages has jumped in the last few months ahead of changes to taxes that will come into effect in April, and the Bank of England has now announced that demand will continue to grow for the next three months.
The Council of Mortgage Lenders reported that in November last year, figures for the issuing of buy-let mortgages were up to 35% higher than they were in the same month in 2014.
Further, the cash value of buy-let loans provided was £3.5 billion – 46% higher than the year previously.
This was following George Osborne ‘s announcement that, from April this year, stamp duty chargeable on buy-let properties will be increased by 3%. Further, landlords will see a reduction in the tax relief that they can claim back on mortgage repayments. 22% of mortgage lenders reported an increase in demand over the few months between the announcement of these changes and now.
Mark Harris, CEO at SPF Private Clients, a mortgage brokerage firm, said; “Landlords may be disgruntled by the double whammy of tax changes and the impending hike on stamp duty, but they can ‘t complain about some of the cheapest buy-let rates ever. Many landlords are taking advantage of low rates and the removal of tax breaks with remortgaging accounting for the majority of activity in the sector.”
The Bank of England conducted a survey of mortgage to try and assess how landlords would be reacting to the impending tax changes and found that 30% expected the demand for buy-let loans to continue to increase over the next few months up to April.
It is not just buy-let lending that has increased though, the results of the Bank of England ‘s survey also show that rates of personal borrowing and consumer credit use have gone up significantly since the third quarter of 2015.