Landlords and professional investors prop up the property market

Author: David Whittaker Posted on: 20 October 2011

The latest gross lending statistics from the Council of Mortgage Lenders are out.

Gross mortgage lending totalled an estimated £12.9 billion in September. This represented a 2% decrease from the £13.1 billion lent in August but was 4% higher than September 2010 (£12.4 billion), according to new data from the Council of Mortgage Lenders.

Gross lending for the third quarter of 2011 was therefore an estimated £38.6 billion, a 15% increase from the second quarter of this year (£33.5 billion) and a 2% increase from the third quarter of 2010 (£37.9 billion).

In today’s market commentary, CML chief economist Bob Pannell observes:

"Both house purchase and remortgage lending appear to have fared well in September, but this is against the backdrop of subdued levels of activity.

"However, short-term economic prospects for the UK are not favourable. The housing market is very sensitive to wider household confidence, and this seems likely to weaken over the coming months in response to the latest spike in consumer prices and headline unemployment figures."

The cocktail of record low interest rates and record high inflation has made the prospect of saving for a deposit as realistic as finding a pot of gold at the end of a rainbow. This, and the impact of low overall economic confidence, is reflected in subdued overall lending in the traditionally busy early autumn period when the market is usually dominated by owner occupiers buying and selling after the summer break. Many will take cheer from the fact that the year-on-year figures show solid growth in lending levels, but this rise has been driven by professional investors and buy-to-let borrowers.

While property prices stagnate and rental demand increases at an ever increasing rate, it is landlords and professional investors who will continue to enjoy a purple patch and prop up the rest of the market.