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Buy-to-let lending hits three year high

Buy-to-let lending hits three year high

Category: Mortgages

Updated: 11/08/2011
First Published: 11/08/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The buy-to-let market continued to show strong growth in the second quarter of the year, with an increase in the value and number of loans.

Indeed, figures released by the Council of Mortgage Lenders (CML) have revealed that both the value and quantity of buy-to-let lending from April to June was the highest since the last quarter of 2008.

There were 32,000 loans approved for buy-to-let lending in the three month period, worth some £3.5 billion.

The size of the buy-to-let sector has increased considerably in the last 12 months, figures from show, with product numbers peaking at 505 towards the end of July.

The majority of the new lending was driven by remortgaging activity, with 65% of the overall increase down to remortgagors.

The value of the 15,230 loans for remortgage, at £1.6 billion, was 27% higher than in the first quarter and accounted for 53% of the total gross buy-to-let lending - up from 51% in the first quarter.

The CML tempered the rise by pointing out that although the quarter's increase has been significant, the market is currently running at around a third of the level seen at its peak in 2007.

Meanwhile, for the first time since 2008, arrears rates for buy-to-let mortgages are lower than in the owner-occupied sector.

In the second quarter, all buy-to-let cases where loans were over three months in arrears (including those under control of a receiver of rent) were, at 28,100 or 2.09% of the total, 0.05 percentage points lower than in the owner-occupied sector.

Paul Smee, director general of the CML, said that the enlarged buy-to-let numbers, combined with recent research that showed June saw the highest number of mortgages taken out by first-time buyers in 10 months, suggest that first-time buyers are not being displaced by buy-to-let landlords but are holding their own in a restricted market.

"So, this is encouraging news for those who want to rent, as long as it is realised that much of the current increase is for remortgage rather than house purchase," he added.

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