Official data released by the Bank of England has revealed that the level of buy to let lending during the third quarter of 2014 was significantly more than the equivalent amount recorded in the third quarter of the previous year.
In fact, it has reached the highest quarterly figure recorded since the crash that crippled the market in 2008 with buy to let lending totalling £8 billion during this year’s Q3 compared to £5.9 billion during the same period last year.
Following a number of years under an economic climate in which mortgage products were considered unfavourable, it appears banks are once again getting behind the market. No longer considered as risky, lenders have been re-entering the rental market over the last year.
Andrew Montlake, a spokesperson of mortgage broker Coreco, pointed out how the decision from banks such as Natwest and Santander to get back into the buy to let market has caused rates to decline to levels “never seen before”.
The Bank of England reported that the swell in the buy to let market has been a factor in the quarterly rise of 0.5 per cent among all residential loans outstanding in the third quarter of 2014 to £1,256 billion.
Managing partner of Anderson Harris, John Harris, explained the trend by saying there is a “general feeling” that buy to let lending is once more a viable option for lenders; although not quite to the extent it was in 2006 and 2007 – a period he described as a “free for all”.
He cited the strictness of the mortgage market review introduced in April and the capping of many high loan-to-value mortgages as reasons for the shift in focus to buy to let.
More aspiring landlords
The rise in credit availability for buy to let mortgages has come at a time when the number of “wannabe-landlords” is also on the up.
Andrew Montlake explained that more people are deciding to keep their urban properties, remortgage them, switch to a buy to let product and use the equity they make to buy a larger country home.
This is a phenomenon seen mostly in London, where homeowners are aware of the benefits of holding onto a property as a profitable long-term investment.
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10th December 2014