Buy to let lending overtakes that of first-time buyers

For the first time since the financial crisis, landlords borrowed more in the first quarter of the year than first-time buyers, new figures from the Bank of England have revealed.

New buy to let mortgages accounted for 21.1% of all lending in the first quarter of 2016, compared with first-time buyer mortgages, which accounted for 16.9%.

The last time buy to let borrowing outstripped that of first-time buyers was in early 2008, during the financial crisis.

Landlords took out £13.5bn in the first quarter of 2016, while first-time buyers borrowed £10.8bn, according to the Bank of England.

The rush on buy to let mortgages has been explained by the introduction of the second home stamp duty surcharge, which came into effect on 1st April.

The new stamp duty surcharge, introduced by the government, applies to second homes and buy to let properties, hence investors wanting to accelerate purchases in March.

Remortgages accounted for 25.3% of all lending, while other mortgages made up 34.2 % and further advances, 2.6%.

Although buy to let lending is said to have calmed since the introduction of the additional tax on 1st April, market analysts have predicted that the overall trend will continue in favour of buy to let investors.

Colin Bell, commercial mortgages managing director at Hampshire Trust Bank, said:

“We believe buy to let lending volumes will continue to increase in 2016 and the reason for this is twofold.

“Firstly, it is becoming more difficult for people to buy their own homes because of rising house prices.

“At the same time, there is a changing attitude among 20 to 30 year olds, who are becoming a populous of rent not buy, including movies, cars, clothing as well as property. Therefore, buy to let landlords will become an increasingly important part of the housing market.”

Similarly, economists are expecting house prices to rise by 5% to 6% this year.

Howard Archer, economist at IHS Global Insight, said:

“High employment, decent purchasing power and the probability that interest rates will not rise for some considerable time to come(and highly unlikely in 2016) should underpin house buyer interest.” 


You may also be interested in: 

Top 10 Best Buy to Let Mortgages for Limited Companies 

Top 10 Best Buy to Let Remortgage Products

Residential Stamp Duty Land Tax Calculator 

The homebuyer's guide to getting a mortgage


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