Student landlords will be relieved banks and building societies are lending more to property investors – but although the latest figures show a rising market, the levels are still significantly below the boom years.
Both the number and amount of buy to let mortgages increased in the quarter ending September 30, 2012, according to the latest figures from the Council of Mortgage Lenders (CML), the trade body for banks and building societies lending mortgages in the UK.
In the period, borrowers were advanced 34,400 loans totalling £4.2 billion – an increase of 2% in the 33,600 mortgages advanced in the previous quarter and an 8% increase in value, up from £3.9 billion.
For the three quarters to the end of September, lenders agreed buy to let mortgages of £11.8 billion – a 19% increase on the £9.9 billion advanced in the comparable time last year.
However, the CML explains, the figures need putting in context as the market is running at a much lower level than before the recession.
“Buy-to-let activity is recovering from a low base and remains subdued compared to the pre-credit crunch era. Buy-to-let lending this year is likely to total a little over one-third of its peak in 2007,” said the CML report.
The average loan-to-value for buy-to-let mortgages is 75%, while the average minimum rental cover of 125%. Neither has shown any real change in the past three years.
Landlords had 1,444,000 mortgages worth £164.3 billion at the end of September.
This was more than the 1,414,000 mortgages worth £162.5 billion outstanding at the end of the second quarter, and an increase on the 1,367,000 mortgages worth £156.7 billion outstanding at the same time 12 months ago.
CML director general Paul Smee said: "Buy-to-let lending is continuing to recover, and to grow in line with expectations. As well as continuing to fund owner-occupation, lenders are contributing to the expansion of a strongly growing rental sector, helping to deliver choice and mobility for tenants.
“The growth of private renting looks set to continue in the years ahead, and lenders are committed to playing a full part in the debate about how best to meet the evolving needs of tenants in the future."
