Buy to let sector reports only lending increase for past year

Twelve per cent more buy to let loans were secured in January 2015 than January 2014 as the sector bucked the wider industry trend which reported falling lending across all other areas

The Council of Mortgage Lenders (CML) has revealed that mortgage lending for buy to let investors thrived while first time buyers and homemovers reduced their activity across the last 12 months.

Some 18,200 buy to let loans were agreed this January worth a combined value of £2.5 billion – an increase of 12 per cent and 14 per cent respectively compared to the same period in 2014.

Paul Smee, Director General of the CML, revealed that lending is expected to pick up again in the months ahead as a seasonal lull is more prominent this year because the start of 2014 was particularly strong.

“Affordability constraints remain a factor for would-be borrowers, but we are still projecting lending to pick up over the next few months,” he explained.

Buy to let lending could remain strong too as Mark Harris, Chief Executive of mortgage broker SPF Private Clients, believes pension freedoms due in April will encourage more people into the market.

“A combination of cheap mortgage rates, easing criteria, plenty of demand from tenants and poor savings rates, are convincing many that investment property is the sensible home for their money,” he said.

His comments follow findings from Rightmove that detail an increase in the number of older prospective buyers considering their options.

Official Bank of England figures have also suggested that 2014 was a strong year for the buy to let sector which ended on a high as buy to let loans issued in December were up 18 per cent.

In comparison to buy to let, only 19,000 loans worth a collective £2.8 billion were advanced to first-time buyers this January; representing a decrease of 14 per cent in number and 10 per cent in value from one year ago.

At the same time, home movers advanced 22,400 loans worth £4.2 billion in January 2015 – down 17 per cent and 14 per cent respectively compared to 2014.

Remortgaging activity witnessed a 12 per cent drop in loan advances and a five per cent drop in value from 2014 to 2015 despite a month on month growth.