Demand for buy to let mortgages still high
05 January 2012
Written by Jenny Barrett
The buy to let mortgage market continued to buck the market trend in the latter stages of 2011, climbing to its highest level in almost three years.
Despite demand for secured lending for house purchases falling slightly in the fourth quarter of 2011, demand for buy to let lending was found to have increased for the sixth consecutive quarter. That’s the report from the Bank of England’s Credit Conditions Survey, which found that buy to let lending has continued to thrive going into 2012.
This has been put down to a number of factors, with the Council of Mortgage Lenders (CML) pointing to a correlation between buy to let mortgages and the amount of first time buyers. Figures released by CML show that buy to let lending reached its highest level in almost three years, as new landlords enter the market and existing landlords look to expand their portfolio.
In the third quarter of 2011, 34,500 buy to let loans were advanced, at collective value of almost £4 billion. This is a rise in volume of 16 per cent on the previous quarter, and an increase in value of 19 per cent. This meant that, in terms of both volume and value, buy to let lending was at its highest since the final quarter of 2008.
Source: CML
(The left vertical axis represents £ millions)
(The left vertical axis represents £ millions)
There was also an increase in house purchase buy to let lending of 27 per cent, compared to the second quarter. The correlation between increased demand for buy to let mortgages and the amount of first time buyers has been highlighted by CML. CML stated that:
“Some of the data for the last decade shows strong growth in buy to let coinciding with declining first-time buyer numbers.”
The Bank of England has said that lenders predict demand for both buy to let and residential mortgage lending to decline in the first quarter of 2012. But with demand in the private rented sector still high, this is unlikely to continue for long.
