Buy To Let Mortgages. Boom Time Returns.

After last years crisis of confidence the buy-to-let market is again booming. Earlier worries that interest rates were on the up and property values would crash are firmly behind us. So, fuelled by rising rental yields confidence, landlords have been snapping up new properties and remortgaging for cheaper deals.

In the final three months of last year, rental incomes increased by an average of 3.3%. At the same time the rental yield, income as a percentage of the property's value, edged up from 6.42% to 6.45%. The latest report from the Council of Mortgage Lenders (CML) also shows that the value of new buy-to-let mortgages increase by 47% in the second half of 2005 over the preceding six months whilst the number of these mortgages rose by 39%.

Indeed, we expect the boom to extend throughout 2006. It will be powered by the steady increases in house prices, a healthy demand from tenants, especially the first time buyers who remain priced out off the property ladder and a glut of cheaper buy to let deals.

Mortgage lenders are happy as well! Industry figures show that buy-to-let mortgages are now a safer bet for them than homeowner mortgages. According to the CML, percentage of arrears in buy-to-let mortgage is now lower than that for homeowner mortgages - and the arrears trend for buy-to-let is improving whist for homeowners it's getting worse.

Not surprisingly, the mortgage lenders have responded by relaxing some of their lending criteria and aggressively promoting buy-to-let again.

In the past, buy-to-let lenders have required monthly rental income to exceed mortgage payments by 30%