BTL mortgages still only a third of its peak, say lenders

Friday 10th August 2012

Buy-to-let lending increased by 5% in the second quarter of 2012, says the Council of Mortgage Lenders, but is still way off its peak.

In the three months to June, lenders advanced 33,200 loans worth £3.9bn (up from 32,300 mortgages worth £3.7bn in Q1).

Year-on-year, the buy-to-let market continued to grow strongly, with the volume of loans up 14% (from 29,100) and the amount advanced up 18% (from £3.3bn).
 
Growth in buy-to-let lending was evenly split between loans for house purchase and remortgaging, with both showing a 3% increase by volume over the first quarter.

While buy-to-let lending is continuing to recover from its low point in 2009, lending volumes nevertheless remain at around one-third of their peak in 2007.
 
The average maximum loan-to-value available on buy-to-let mortgages remained at 75%, with average minimum rental cover at 125%. Both have been broadly unchanged for the last three years.
 
There has been a slight improvement in the performance of buy-to-let loans, with the proportion of borrowers more than three months in arrears declining from 1.69% at the end of the first quarter to 1.56% at the end of June. By comparison, arrears in the owner-occupied sector are 2.05%.
 
The proportion of buy-to-let properties taken into possession was unchanged at 0.12%, while in the owner-occupied sector the data showed a small decline (from 0.08% to 0.07%).

The CML said it is not surprising to see a lower repossession rate in owner-occupied households where there is a concerted effort to extend forbearance wherever possible.