The best time to buy-to-let with a mortgage

The best time to buy-to-let with a mortgage

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A time series of yields are important in order to understand the background to the market, but yields can’t be analysed in isolation. These two charts help explain why investors are attracted to the buy-to-let sector.

Firstly, the dearth of the savings rate.

Average savings rate versus net buy-to-let yields
Average savings rate versus gross buy-to-let yields

 

Secondly, mortgage interest rates are cheap compared to yield. Investments which deliver a higher net yield than the interest rate on paid their (interest only) mortgage will immediately benefit from a increased income return on their equity. To find investment hotspots please search our heat-map or scroll through our buy-to-let index. To compare mortgages or get a quote from an adviser please see our best buy table.

Gross buy-to-let yields versus the average mortgage rate
Gross buy-to-let yields versus the average mortgage rate

This chart shows that the buy-to-let sector offers better value now than at any time between 2000-2008 for mortgaged backed acquisitions. 

If interest rates continue at a historic low then we shouldn’t be surprised to see additional investment into the buy-to-let market.

Next we’ll explore what happens to average buy-to let-income returns when we add a debt element at 75% LTV.