Buy-to-let lending up 18%

13 August 2012

Buy-to-let lending has increased by 18% over the past year to hit £3.9 billion, according to the Council of Mortgage Lenders (CML).

Lending increased by 5% in the second quarter of 2012, with 33,200 loans advanced worth £3.9 billion. This is up from 32,300 mortgages worth £3.7 billion that were advanced in the first quarter of this year.

Despite this, lending volumes are still around one-third of their 2007 peak.

Buy-to-let lending continues to expand, and there are now just under 1.5 million outstanding buy-to-let mortgages worth £160.7 billion.

Paul Smee, director general of the CML, says that the market continues to show signs of recovery, helped by strong demand in the rental sector.

Brian Murphy, head of lending at broker Mortgage Advice Bureau, says the buy-to-let market is being driven by the lack of first-time buyers, and this will continue for at least the next 12 months.

He adds: "However, we will eventually reach a ceiling for rental growth, as rates have been rising and can't keep going up indefinitely."

Mark Harris, chief executive of mortgage broker SPF Private Clients, says criteria for buy-to-let mortgages still remains tighter than before the downturn.

"While capital growth on investment properties is likely to remain subdued for some time to come, income is strong and returns are favourable when compared with other investments. Buy-to-let is only going to grow in popularity as more lenders return to the market, and rates and criteria will become increasingly competitive," he says.

This article was taken from our sister publication, Money Observer.

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