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Buy-to-let lending surges to five year high

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The number of mortgages granted to buy-to-let investors has reached a five year high, according to figures.

Some 40,000 buy-to-let loans worth £5.1bn were granted between March and June, the Council of Mortgage Lenders said.

Both the number of loans and the value of lending jumped by roughly a fifth on the previous quarter to reach the highest levels since the third quarter of 2008.

The total value of buy-to-let lending was also 31% higher than the same time last year.

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 remortgage, 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.”

Buy-to-let mortgages represented 13.3% of all outstanding mortgage lending, compared to 13.1% in the previous quarter and 12.9% a year earlier.

In terms of use, the number of buy-to-let loans for house purchase increased by 15%, while the total value jumped 19%. The number of remortgages grew by almost a quarter and the value increased 29%.

The proportion of buy-to-let mortgages in arrears of over three months crept up from 8.3% in the first quarter of 2013 to 8.4% in the second. The possession rate was 0.09%.

Lettings agent Rentify chief executive officer George Spencer said: “This growth is fuelled by a renewed appetite from investors – both experienced and novice alike, along with better availability of buy-to-let mortgages at lower rates and with looser criteria than at any time in the past five years.

“Demand from tenants continues to be strong, as many delay getting a foot on the housing ladder themselves, perhaps because they haven’t got a deposit or want to retain some flexibility.”

Stuart Law, CEO of Assetz, said: “While the growth of the sector in London is clear to see, the house price ripple effect is only just beginning now in the North where there are excellent opportunities for investment – particularly in key cities like Manchester, Liverpool, Birmingham and their suburbs. Many Southern investors are broadly unaware of the lucrative yields available in northern market, at prices that represent the beginning of the next cycle.”


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