Buy To Let
Buy-to let lending looks set to pass boom peak in 2013
The Council of Mortgage Lenders highlighted that the 2012 share of the market was the highest slice of the market achieved since buy-to-let lending occupied 12.6% of the market in 2007.
CML figures out today show lending in the sector accounted for 11.5% of total gross mortgage lending in 2012, rising from 9.8% in the previous 12 month period.
At £16.4bn of total lending, the 2012 total is 19% higher than the £13.8bn achieved in 2011. This was the biggest year for buy-to-let lending in four years with nearly 1.5m buy-to-let mortgages outstanding at the close of the year, representing 13% of the total mortgage market.
The trade body said that 136,900 loans were completed during the year, with remortgages constituting about half of lending.
Jonathan Harris, director of mortgage brokerage Anderson Harris, commented: “It is no surprise that the sector continues with its strong performance.
“As would-be first-time buyers continue to struggle to get on the housing ladder, more people are turning to renting. This is pushing up rents, making the sector increasingly attractive to investors.
“With more buy-to-let deals available, rates are increasingly competitive although criteria remain tighter than before the downturn and are not easing significantly.
“While capital growth on investment properties is likely to remain subdued for some time to come, income is strong and returns favourable when compared with other investments. Buy-to-let is only going to grow in popularity as mortgage rates become increasingly competitive.”
Kristjan Byfield, director of sales and letting agents Base Property Specialists, added: “In much of the country, buy-to-let has become the engine room of the property market as a whole.
“The rapid growth in buy-to-let lending throughout 2012 is a testament to property investors’ returning appetite. Gross buy-to-let lending is now at its highest level in four years, stoked by a combination of strong rental demand and low interest rates.
“The demand for rental properties greatly outstrips demand in many areas, and many of the landlords I work with are seeking to expand their portfolio of properties.
“Low interest rates have achieved a neat double act – making mortgages more affordable, and making buy-to-let a substantially more attractive investment than low-paying savings accounts.”