Is buy to let lending rising or falling?

AFS Team·29 May 2013·3 min read
Is buy to let lending rising or falling?
So is buy to let mortgage lending rising or falling – well, it depends on how you interpret the figures.

The Council of Mortgage Lenders, the buy to let bank and building society trade body, has released the landlord borrowing figures for the first quarter of 2013.

The facts are:
• £4.2 billion gross was advanced against 33,500 mortgages in the first three months of 2013
• £4.6 billion gross was advanced in the last three months of 2012
• £3.7 billion gross was advanced in the first quarter of 2012

The figures show lending has increased in the past year – but dropped in the last three months.

The CML states that buy to let lending is ‘continuing to grow’, but seems to have based the comment on other statistics:
• Buy to let accounts for 13.4% of all outstanding home loans in Q1 of 2013
• Buy to let was 13% of all outstanding mortgages in Q4 2012
• Buy to let lending accounted for 12.9% of all mortgage lending in Q1 2012

If the CML confirms buy to let is growing because borrowing is a greater proportion of outstanding loans, this is misleading, as this increase comes from a change of direction by lenders. Instead of funding owner-occupier loans, they are focusing on buy to let.

CML director general Paul Smee said: "The buy-to-let mortgage market is performing well against a backdrop of robust landlord - and tenant - demand for good quality rental property. Loan performance compares favourably with the owner-occupier sector, and buy-to-let continues to grow as a proportion of the overall mortgage market.

"As the private rented sector looks likely to be the longer-term tenure in which more households may live in the future, lenders are actively looking at how they can best evolve their future lending for those landlords who may wish to offer longer-term tenancies to their tenants - although concrete landlord demand for such borrowing is not yet clear."