UK buy to let lending up 5% in second quarter of 2012
10-08-2012
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In the three months to June, lenders advanced 33,200 loans, worth £3.9 billion, up from 32,300 mortgages, worth £3.7 billion in the first quarter.
The CML said that year on year the buy to let market continued to grow strongly, with the volume of loans up 14% from 29,100 and the amount advanced up 18% from £3.3 billion.
Growth in buy to let lending was evenly split between loans for house purchase and remortgaging, with both showing a 3% increase by volume over the first quarter.
Year on year, lending for house purchase has grown more strongly than remortgaging, up 17% by volume and 21% by value an up 10% by volume and 15% by value, respectively.
However, buy to let lending is continuing to recover from a low point in 2009, and lending volumes remain around one third of their peak in 2007.
The stock of buy to let mortgages continues to grow. At the end of the second quarter, the number of outstanding loans totalled 1,416,000, worth £160.7 billion, up from 1,405,000, worth £159.4 billion at the end of the first quarter, and from 1,338,000, worth £153 billion a year earlier.
The average maximum loan to value available on buy to let mortgages remained at 75%, with average minimum rental cover at 125%. Both have been broadly unchanged for the last three years.
The data showed a slight improvement in the performance of buy to let loans, with the proportion of borrowers more than three months in arrears declining from 1.69% at the end of the first quarter to 1.56% at the end of June. In the owner occupied sector, the proportion was unchanged at 2.05%.
The proportion of buy to let properties taken into possession was unchanged at 0.12%, while in the owner-occupied sector the data showed a small decline from 0.08% to 0.07%. The CML said that it is not surprising, however, to see a lower rate in owner occupied households, where there is a concerted effort to extend forbearance wherever possible.
‘Buy to let is continuing to show signs of recovery and growing broadly in line with expectations. The rental sector has grown strongly over the last decade or so, and buy to let continues to help deliver a wider choice for tenants,’ said CML director general Paul Smee.
David Whittaker, managing director of Mortgages for Business, said the figures are very encouraging. 'Volumes are up, values are up and, even more encouragingly, arrears are down. We expect this trend to continue into the traditionally busier autumn period which should set up the market well for the end of the year,’ he added.
According to Brian Murphy, head of lending at leading broker Mortgage Advice Bureau, said that buy to let is a mature market now and it’s still seen by lenders as a growth sector with high street brands still looking to take market share.
'Most landlords are experienced professionals and arrears are lower than in the residential market, so they are seen as low risk. At the moment its still being driven by the lack of first time buyers in the market and this will continue for at least the next 12 months. However, we will eventually reach a ceiling for rental growth, as rates have been rising and can’t keep going up indefinitely,' he explained.
