The number of people taking out buy to let mortgages dramatically increased in the three months to September.
Official figures show that of the 11.3 million mortgages in the UK, 1.44 million are buy to let.
The number of buy to let loan deals has reached a record high, with one in eight mortgages now a buy to let loan deal.
Figures from the Council of Mortgages (CML) reveal that the value of buy to let mortgages increased by 8% in the third quarter alone.
The number of loans advanced in the three months to September increased by 2% on the previous quarter.
A decade ago there were only 275,000 buy to let loans, equal to just 2.4% of the entire market. Now buy to let loans take a total of 12.7% of the mortgage market.
Soaring house prices have pushed first time buyers and young buyers out of the housing market.
The average house price is nearly £160,000 which is more than six times higher than the average salary. In addition, the cost of rent in the private sector has increased to a record high of £741 per month.
The reality of this housing horror is that the high cost of rent prevents potential buyers saving for a large deposit.
“Buy to let lending is continuing to recover, and to grow in line with expectations. As well as continuing to fund owner-occupation, lenders are contributing to the expansion of a strongly growing rental sector, helping to deliver choice and mobility for tenants,” said CML director general Paul Smee.
“The growth of private renting looks set to continue in the years ahead, and lenders are committed to playing a full part in the debate about how best to meet the evolving needs of tenants in the future.”
What is a tenant loan?
Tenant loans are ideally suited to individuals who do not own any kind of home or property of their own.
A tenant loan works in the same way as any other personal loan. Therefore, they are not supported by any sort of property. It is important to ensure that you are able to meet repayments and fully understand the terms and conditions attached to your loan.