Lenders advanced 152,500 loans, worth £17.5 billion, representing an increase of 17 per cent by volume and 20 per cent by value over the previous record totals, posted in the second half of 2005.
There are now 767,000 outstanding residential buy-to-let mortgages in the UK, worth a total of £83.9 billion. Because the strong growth of buy-to-let borrowing contrasted with a slower increase in lending in the wider market, the residential investment mortgage market now accounts for 8 per cent of the value of outstanding UK lending, compared to 7 per cent in the first half of 2005.
The proportion of buy-to-let mortgages in arrears of three months or more rose slightly, from 0.68 per cent of the stock to 0.73 per cent in the first half of 2006. But arrears remained lower than in the wider mortgage market, where 0.96 per cent of borrowers were three months or more in arrears in the same period.
Typical underwriting criteria in the buy-to-let market remained unchanged, with an average maximum loan-to-value ratio of 85 per cent and lenders requiring rental income to exceed mortgage repayments by at least 25 per cent.
Michael Coogan, director general at the CML, said: "The buy-to-let market remains robust, underpinned by strong rental demand. But investors have shown that they are quick to adjust to changing market conditions, so the view that interest rates are now more firmly on an upward trend is likely to cause the rapid growth of buy-to-let investment to slow in the coming months.
"Fundamentally, however, the rental market remains sound and looks set to continue to offer good long-term prospects for astute investors."
