Buy to let lending surges to £5 billion

AFS Team·9 August 2013·3 min read
Buy to let lending surges to £5 billion
Landlords borrowed more than £5 billion in the second three months of 2013 as the buy to let market showed strong signs of revival.

The figures for the second quarter hit the highest levels in five years as 40,000 buy to let mortgages worth £5.1 billion were agreed by lenders.

Despite the boost for landlord, bank and building society trade body the Council of Mortgage Lenders explained the booming figures are from a low base.

Buy to let lending may have surged by a fifth in just three months, but the levels are still far behind the heady levels of the pre-credit crunch housing bubble.

Compared with the same period in 2012, the number of mortgages was up 19% from 33,500 while the amount borrowed was 31% higher than the £3.9 billion advanced a year ago.

Although borrowing to buy was split evenly with refinancing existing buy to let loans, the number of remortgages rose 24% and increased by nearly 30% in value.

The CML study also showed buy to let is growing as a percentage of all mortgages, totalling 13.3% of all lending, compared with 12.9% 12 months ago.

Overall, landlords owe £168.5 billion across 1.48 million loans to buy to let lenders.

Buy to let mortgages with arrears of more than three months were 8.4% of the total, the same as the first three months of 2013, but 9.7% down on a year ago. The repossession rate of 0.09% is more than 0.07% in the wider mortgage market, but dropped from 0.11% in the previous three months.

CML head of policy Jackie Bennett 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.

“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 has seen the continuing recovery of the buy-to-let market."