This compares with £4.6 billion the previous quarter, and £3.7 billion in the first quarter of last year.
Nearly half of this lending was for remortgage, rather than house purchase. Nevertheless, the buy-to-let sector continued to grow, and loan performance improved.
By the end of March buy-to-let lending accounted for 13.4% of total outstanding mortgage lending in the UK - up from 13% the previous quarter and 12.9% at the end of the first quarter of 2012.
There are now around 1.46 million buy-to-let mortgages in the UK, accounting for around 13% of the total estimated stock of 11.26 million mortgages.
Of all mortgages in arrears of over three months, only 8.3% were buy-to-let (down from 9.0% the previous quarter and 10.5% in the first quarter of last year). The possession rate, at 0.11%, was higher in the buy-to-let sector than the 0.07% in the owner-occupied sector, but fell from its previous quarterly rate of 0.12%.
Commenting on the quarterly performance of the buy-to-let mortgage sector, 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."
David Whittaker, managing director of Mortgages for Business said:
“The economy may be firing blanks but the buy to let market is going great guns. High yields, stagnant property prices and improved financing options are encouraging investors to add to their portfolios. Life might have become marginally easier for first-time buyers in the last six months. But only marginally. Their life was already about as miserable as it could get. The flow of first-time buyers is still barely a trickle, which is sending the excess demand directly into in the rental sector and keeping yields high for buy to let investors. Landlords are understandably trying to take full advantage of the returns on offer, which is why we’ve seen an increase in the number of buy to let investors trying to refinance in the first quarter as they look to expand their portfolios.
This activity has been helped by increased competition between the buy to let lenders. Rates and fees are down and there are increasing options for landlords looking to finance more complex deals. The Funding for Lending Scheme too has helped by loosening the supply of credit to lenders, and they are passing the savings on to investors.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments:
“Buy-to-let boomed in first quarter of 2013 with gross mortgage lending up by £500million compared to the first quarter of 2012. Poor savings rates have sparked interest in the buy-to-let market as investors look to capitalise on growing tenant demand and strong long-term returns.”
The increase in demand for privately rented property reflects the growing appeal of flexible living arrangements far from being a second-best option. Renting can often compliment the lifestyle of many people with changeable personal circumstances, especially those with roaming work locations and seasonal commitments. Thanks to the Help to Buy scheme, we can expect fewer people in a situation where they feel forced to rent leaving remaining tenants satisfied renting best suits their needs.”
Christopher Down, Chief Executive, Hearthstone Investments said,
“The latest CML Buy-to-Let figures are highly encouraging, showing that there has been strong growth in the residential buy-to-let property sector – emphasised by strong demand for quality rental property throughout the UK from tenants and landlord alike. Similarly it is equally good to see that there appears to have been an easing of credit conditions with increased lending this quarter compared to the same quarter last year.
Despite these positive movements in the sector, lending conditions continue to act as a barrier for some who seek to enter the residential buy-to-let market. Although those struggling to secure a mortgage can still capitalise on upturns in this market without having to physically own a property, by investing in a diversified and regulated fund. This provides all of the advantages of buy-to-let, without the significant time and financial commitments. ”
Stuart Law, Chief Executive of Peer-to-Peer lender Assetz Capital comments:
“Today’s CML announcement that Buy-to-Let lending has increased is great news for the sector, but does not take into account the growth in the Peer-to-Peer mortgage market.
Currently, many high net worth individuals who live abroad and want to invest in the UK are prevented from obtaining a mortgage on UK property due to their non-domicile status. As a result, we have seen a great appetite for funding from the Peer-to-Peer sector. Assetz Capital recently launched its ‘Lend-to-Let’ mortgage product and already has 50 overseas buyers registered for a P2P Buy-to-Let mortgages. We have just entered our 5th mortgage auction, and interest in this low-risk, high-return investment opportunity is accelerating rapidly.
Lend-to-Let is set to have a significant impact on the UK Buy-to-Let whilst banks avoid this part of the market.”
haart CEO Paul Smith reacts to today’s CML Buy-to-let and Repossessions announcement:
“Strong buy-to-let lending growth and fewer repossessions than last year is a great confidence boost to the property market which has started the year showing great fighting spirit. Landlords are rightly seeing the opportunities to be had with the booming rental market and are taking positive steps to grow their portfolios and lenders seem keen to support them.
While first-time-buyers are still getting to grips with the latest government ‘helplines’ and picking their way through the best mortgage deals, rentals will inevitably remain strong.
Fewer properties being taken into possession each quarter is down to interest rates remaining low, a fairly secure employment market and the willingness of lenders to work with borrowers to avoid repossession.
“While house price growth is not universal, the sentiment from the UK’s biggest lenders is steady growth and this will encourage buyers and sellers alike to dip their toes into the market.”
