Buy to let lending bounces back to highest level for five years

Buy to let lending is back to its highest for five years – when the credit crunch struck.

Lenders advanced 40,000 mortgages worth £5.1bn to buy to let investors in the second quarter of 2013, according to the Council of Mortgage Lenders

Both the number of buy to let loans, and the value of lending, were the highest since the third quarter of 2008.

Buy to let lending is continuing to recover strongly, said the CML, but from a low base. The number of loans advanced in the second quarter was 19% higher by volume and 21% higher by value than in the preceding three months when lenders advanced 33,500 mortgages worth £4.2bn.

Year-on-year, buy to let lending was 19% higher by volume and 31% higher by value, (compared with 33,600 loans in the second quarter of 2012, worth £3.9bn).

Buy to let lending for house purchase accounted for around half the loans advanced, and increased by 15% by volume and 19% by value over the preceding quarter.

The growth in re-mortgaging was stronger, with an increase over the same period of 24% by volume and 29% by value. This growth in re-mortgaging partly reflects improved conditions in funding markets and more widespread availability of mortgage credit.

By the end of June, buy-to-let mortgages accounted for 13.3% of outstanding lending in the UK (up from 13.1% in the preceding quarter and 12.9% a year earlier). The number of outstanding mortgages totalled 1.48 million, worth £168.5bn.

Buy to let mortgages in arrears of over three months accounted for 8.4% of the total, up slightly from 8.3% in the preceding quarter but down from 9.7% a year earlier. The possession rate at 0.09% was higher than the 0.07% in the wider mortgage market, but fell from 0.11% in the previous quarter.

 CML head of policy Jackie Bennett said: “Strong rental demand is contributing to the continuing expansion of the buy to let sector, but growth is also being helped by improved conditions in funding markets and more widespread availability of mortgages.

“These conditions are creating more opportunities for landlords to re-mortgage, as well as helping to fund increased activity in the mortgage market more generally.

“This spring, we have seen the highest levels of lending to first-time buyers since 2007, alongside the continuing recovery in the buy to let market.”

Peter Lawrence at Lawrence Rand said: “These figures clearly show that confidence amongst investors in the buy to let market remains strong and that the private rental sector has become well established as a tenure of choice for many.”