Lenders advanced 40,000 mortgages, worth £5.1 billion, to buy-to-let investors in the second quarter of 2013, according to data published today by the CML. Both the number of buy-to-let loans, and the value of lending, were the highest since the third quarter of 2008.
Buy-to-let lending is continuing to recover strongly, but from a low base. The number of loans advanced in the second quarter was 19% higher by volume and 21% higher by value than in preceding three months (when lenders advanced 33,500 mortgages, worth £4.2 billion). Year-on-year, buy-to-let lending was 19% higher by volume and 31% higher by value (33,600 loans in the second quarter of 2012, worth £3.9 billion).
Lending for house purchase accounted for around half the loans advanced, and increased by 15% by volume and 19% by value over the preceding quarter. But the growth in remortgaging was stronger, with an increase over the same period of 24% by volume and 29% by value. This growth in remortaging partly reflects improved conditions in funding markets and more widespread availability of mortgage credit.
By the end of June, buy-to-let mortgages accounted for 13.3% of outstanding lending in the UK (up from 13.1% in the preceding quarter and 12.9% a year earlier). The number of outstanding mortgages totalled 1.48 million, worth £168.5 billion.
Buy-to-let mortgages in arrears of over three months accounted for 8.4% of the total, up slightly from 8.3% in the preceding quarter but down from 9.7% a year earlier. The possession rate, at 0.09%, was higher than the 0.07% in the wider mortgage market, but fell from 0.11% in the previous quarter.
Commenting on the data, the CML's 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, we have seen the highest levels of lending to first-time buyers since 2007, alongside the continuing recovery in the buy-to-let market."
Stuart Law, CEO of Assetz, comments:
“Today’s figures from CML yet again highlight that the buy-to-let sector continues to boom. We are seeing more people approaching pensionable age investing in order to bolster their retirement income at a time when the Bank of England indicates base rates, and therefore savings rates, will stay low for at least three more years.
While the growth of the sector in London is clear to see, the house price ripple effect is only just beginning now in the North where there are excellent opportunities for investment - particularly in key cities like Manchester, Liverpool, Birmingham and their suburbs. Many Southern investors are broadly unaware of the lucrative yields available in northern market, at prices that represent the beginning of the next cycle.”
