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BTL lending highest since Q3 2008

Sam Cordon

August 8, 2013

Lenders advanced 40,000 mortgages worth £5.1bn in the second quarter of 2013, 19% higher by volume and 21% higher by value than the preceding three months and 19% and 31% respectively, year on year.

Jackie Bennett, CML head of policy, said: “Strong rental demand is contributing to the continuing expansion of the buy-to-let sector but growth is also being helped by improved conditions in funding markets and more widespread availability of mortgages.”

Lending for house purchasing accounted for around half the loans advanced and increased by 15% by volume and 19% by value over the preceding quarter.

But the growth in remortgaging was stronger with an increase over the same period of 24% by volume and 29% by value.

By the end of June buy-to-let mortgages accounted for 13.3% of outstanding lending in the UK up from 13.1% in the preceding quarter and 12.9% a year earlier.

Bennett said: “These conditions are creating more opportunities for landlords to remortgage as well as helping to fund increased activity in the mortgage market more generally. This spring we have seen the highest levels of lending to first-time buyers since 2007 alongside the continuing recovery in the buy-to-let market.”

The number of outstanding mortgages totalled 1.48 million, worth £168.5 billion.

Buy-to-let mortgages in arrears of over three months accounted for 8.4% of the total up slightly from 8.3% in the preceding quarter but down from 9.7% a year earlier.

The possession rate, at 0.09%, was higher than the 0.07% in the wider mortgage market but fell from 0.11% in the previous quarter.

Stuart Law, chief executive of Assetz, said: “Today’s figures from the CML yet again highlight that the buy-to-let sector continues to boom. We are seeing more people approaching pensionable age investing in order to bolster their retirement income at a time when the Bank of England indicates base rates, and therefore savings rates, will stay low for at least three more years.

“While the growth of the sector in London is clear to see the house price ripple effect is only just beginning now in the North where there are excellent opportunities for investment particularly in key cities like Manchester, Liverpool, Birmingham and their suburbs. Many Southern investors are broadly unaware of the lucrative yields available in northern market at prices that represent the beginning of the next cycle.”

George Spencer, chief executive of Rentify, the online lettings company, said: “This growth is fuelled by a renewed appetite from investors both experienced and novice alike along with better availability of buy-to-let mortgages at lower rates and with looser criteria than at any time in the past five years.

‘Because the recovery is coming from such a low base we expect the market to continue to grow at an impressive rate in coming months.

“We are adding rental properties to our website at the rate of 600 a week and now have 140,000 landlords and tenants registered with us as both sides look for alternatives to traditional high-street letting agents.”

David Whittaker, managing director of Mortgages for Business, said: “The buy to let market is in rude health. The Bank of England’s forward guidance on interest rates has given investors more confidence which should translate into further activity over the coming months and years.

” Rates are at record lows and now look set to stay that way for roughly three years and high LTV mortgages are more readily available to landlords looking for ways to tap into high yields and the strong demand for rented accommodation.

“Yields are north of 6% on typical rental property and will stay that way while housing stock remains in such short supply and first-time buyer lending remains low by past standards.

“To take advantage of high demand and high yields landlords are refinancing in their droves to try and raise enough capital to make further additions to their portfolios. Remortgaging in the last quarter hit its highest level since the final quarter of 2008 and landlord house purchasing was at its highest since the third quarter of 2008.”


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