allaboutproperty.com logo
Search AllAboutProperty.Com


 

Buy-to-let mini boom continues with mortgage lending to investors up 32% in a year

Published 11th May 2012

The buy-to-let mini-boom is continuing with landlords' mortgages borrowing up 32 per cent in a year and almost half of the cash going towards snapping up new properties, according to new figures

New buy-to-let lending in the first three months of the year totalled £3.7billion, with 32,300 mortgages taken out by property investors, latest figures from the Council of Mortgage Lenders have shown. According to the Council of Mortgage Lenders (CML), this means the amount lent out lending is 32 per cent higher than in the same period of 2011.

Landlords are cashing in at a time of homebuyers struggling to get on the property ladder. An increasing number of would-be buyers - especially those looking to buy for the first time - are still renting, as lending criteria remains strict and deposits high.

Yesterday, figures from property listings website Findaproperty.com showed that rental prices for smaller properties, such as flats, have increased by seven per cent in just a year.

The CML figures also revealed that the number of advances for purchases in the first three months of the year was 17,190. This is up 29 per cent on the same period last year – but has slipped back 8 per cent from the 18,730 in the final three months of 2011.

And despite the huge annual rise in buy-to-let lending, the £3.7billion figure was actually down five per cent on the last three months of 2011, showing that investors could be losing their recent appetite for snapping up rental properties.

The CML added that buy-to-let lending is still only around a third of its 2007 levels.


Mark Harris, chief executive of broker SPF Private Clients, said: ‘Low interest rates and rising demand for rental property from tenants is making the private rental sector an attractive investment proposition.

'While capital growth on buy-to-let is likely to remain subdued for some time outside of prime central London at least, income is strong and returns favourable when compared with other investments.’

The data found the buy-to-let sector continues to increase its share of the mortgage market, with buy-to-let mortgages now making up an estimated 12.8 per cent of the total value of outstanding mortgages.

This is up from 12.6 per cent at the end of 2011 and 12.2 per cent at the end of the first quarter of 2011, highlighting the resurgent growth in buy-to-let.

The total number of buy-to-let mortgages stands at just over 1.4million, with a total value of £159.4billion.

Jonathan Samuels, CEO of Dragonfly Property Finance, said: ‘A shortage of rental stock and strong demand from the growing number of forced tenants will keep driving the sector forward. There is a lot of capacity in this market yet.

‘We have seen a seriously sharp spike in loan applications in the first four months of 2012. There's a lot of portfolio building, as investors add properties to give them increased exposure.’

The average maximum loan-to-value available from lenders on buy-to-let mortgages remained at 75 per cent in the first three months of the year, with the average minimum rental cover 125 per cent - up from 123 per cent in the previous quarter, but otherwise the same as for nearly three years.

In terms of loan performance, the number of buy-to-let mortgages in arrears fell a little in the first quarter of 2012, and the arrears rate on buy-to-let mortgages continues to be lower than in the owner-occupied sector.

At the end of 2011, around 1.7 per cent of buy-to-let mortgages were in arrears of more than three months (including cases where a receiver of rent has been appointed), compared with around 2 per cent of owner-occupier mortgages.


Will buy-to-let lending return to 2007 levels?

Matt Hutchinson, director of house share website Spareroom.co.uk thinks not.

He said: 'With average LTVs on buy-to-let mortgages at 75 per cent and average minimal rental cover at 125 per cent it's unlikely, as 25 per cent deposits will prevent a large number of people, particular amateur landlords, from buying rental property.

'The buy-to-let market has become the domain of the experienced landlord, rather than the speculator.'

Source: ' ThisIsMoney '

View All Latest News

 

 

 

[home][contact][links][news][advice][air ambulance][nonsense news]

 

© 2011 AllAboutProperty.com