Solid growth in buy-to-let lending

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by Gill Montia

Latest figures from the Council of Mortgage Lenders (CML) show that buy-to-let lending has continued to rise, despite fears of a crash in the market.

In the second-half of 2007, buy-to-let lending totalled £24.1 billion, up from £20.8 billion in same period of 2006. The figure was also ahead of lending for the first-half of last year, which stood at £21.2 billion.

The number of loans (including remortgages) taken out by buy-to-let landlords in the second-half of last year rose to 179,100, compared to 171,800 in the first-half of the year and 177,200 in the second-half of 2006.

Outstanding buy-to-let mortgages totalled 1,038,000 at the end of 2007, a rise of almost 23% on 2006 (846,900).

At the end of 2007 lenders held an average 85% maximum of the value of the property purchases being financed. The average rental income required amounted to 120% of the mortgage payment.

The research also shows that arrears remained lower in the buy-to-let sector than in the wider mortgage market, where 1.1% of borrowers were more than three months in arrears at the end of last year.

In the buy-to-let sector, 0.73% of borrowers were in arrears of more than three months in the second-half of last year, although the percentage was up from 0.63% at the end of the first half of 2007, and 0.58% at the end of 2006.

Michael Coogan, CML director general, commented: “Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market … we expect to see a continuing healthy appetite for buy-to-let finance this year, in line with continuing expected consumer demand for private rental property.”