At the end of June, there were 473,000 buy-to-let mortgages outstanding, worth £46.8 billion, compared with 417,500, worth £39 billion, at the end of 2003.
In the first half of this year, lenders advanced 119,800 mortgages, worth £12 billion. Although the number of loans advanced was six per cent higher than in the second half of last year, and their value three per cent higher, growth was slower than in the preceding six months. Then, both the number and value of buy-to-let mortgages grew by more than 50%.
Although buy-to-let has grown strongly in recent years, it still represents less than six per cent of lending overall. As in the mainstream mortgage market, buy-to-let lending has been boosted by remortgaging, which accounted for an estimated 35% of gross advances in the first half of this year. Arrears in the buy-to-let sector are continuing to run at around half the level of the mainstream home-buying market, with only around one mortgage in 240 experiencing arrears of three months or more.
The average maximum that lenders will agree to lend remains unchanged at 80% of the value of the property. On average, lenders also require rental income to be 30% higher than monthly repayments.
Commenting on the new figures, the CML’s director general Michael Coogan said:
“The figures indicate that investors are taking a sensible approach and adjusting to tighter market conditions following recent interest rates rises. They need to continue to consider carefully the outlook for rental yields and property prices, and take into account taxation, maintenance costs and the possibility of void periods when the property cannot be let. But the fundamentals reflect ongoing demand for housing, due to new household formation and delayed moves into home-ownership by some first-time buyers. This should continue to underpin the rental market. So buy-to-let will continue to offer attractions to landlords who research the market properly and invest for the long term.”
