Landlords have been investing more in bricks and mortar in recent months, new figures have revealed.
The number of mortgages being taken out by property investors has increased in the last three months.
Landlords borrowed £8.8billion in September, up 10 per cent quarter-on-quarter, according to the Council of Mortgage Lenders (CML).
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However, this is down 19 per cent year-on-year, it said.
It translates to 56,200 loans in total, up nine per cent compared to the second quarter but down 24 per cent compared to the third quarter in 2015.
Buy-to-let tax changes hit profits
It comes despite buy-to-let changes that will soon begin to hit landlords’ profits.
The changes affect the amount of tax relief that landlords can claim - a benefit that is being phased in from next year and eventually replaced by a 20 per cent tax credit.
What impact has stamp duty had?
The Government has also already introduced a three per cent surcharge on stamp duty for those buying a buy-to-let property.
Paul Smee, director general of the CML, said: “Six months on since the stamp duty changes on second properties and buy-to-let continues to operate at lower levels than a year ago.”
But he added: “Lending for buy-to-let house purchase and remortgaging has settled at its current level over the last four months.”
Warnings that mortgage rates could rise
It comes amid warnings that mortgage rates may be set to rise from their current rock-bottom levels. This stems from an increase in so-called swap rates, which is the measure used by lenders to set their fixed rate mortgages.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “There is a potential blot on the horizon for borrowers in the form of rising swap rates. This may feed through to higher mortgage rates in the short term. The advice to borrowers who have their eye on a cheap rate is to secure it while they can - they are so low anyway, it is unlikely to be a move you will regret.”
Steve Bolton, founder of Platinum Property Partners, added: “With interest rates so low, landlords can make considerable savings by swapping to a more cost effective deal. The threat of a higher tax bill in 2017 should prompt landlords to look for savings wherever they can.”
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