Buy to let increasing
This accounts for around 3.5% of all residential mortgage lending.
In the second half of the year, gross buy-to-let lending totalled £6.7 billion (up from £5.5 billion in the first half of the year and £4.1 billion in the second half of 2001). And buy-to-let borrowers, like their mainstream counterparts, are taking advantage of the positive environment to remortgage – around a third of new buy-to-let lending in 2002 was remortgaging.
But the rise in lending volume was not at the expense of lending quality – average maximum loan-to-value ratios have remained unchanged for two years, at 80%. And the average minimum rental cover requirement has remained at 130% since the CML began collecting buy-to-let figures in 1998. Mortgage arrears have fallen – only 0.42% of buy-to-let loans were three months or more in arrears at the end of 2002, less than half the equivalent proportion for the whole mortgage market.
Commenting on the figures, CML Director General Michael Coogan said: “Buy-to-let lending is often portrayed as more risky and prone to market shocks than mainstream lending. But our figures show the opposite – that lenders are maintaining conservative lending strategies and experiencing very low default rates.”
“Given the lacklustre performance of the stock market and of traditional investment returns, more people are widening their portfolios to include property. Provided they are realistic about rental income and expect to hold on to property as a long-term investment, this continues to look like a reasonable strategy.”