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Buy to let lending is likely to increase by billions over the next three years as smaller, independent lenders come to the market, claims specialist lender Precise Mortgages.
The firm’s managing director Alan Cleary gives some interesting insights into buy to let borrowing for landlords in an interview with a trade magazine.
His comments are aimed at mortgage brokers that he wants to encourage to place business with private lenders rather than mainstream banks and building societies.
Cleary observed that the market appetite for buy to let is around £20 billion a year, but currently sits at around £12 billion.
He predicts the market will grow to £20 billion by 2015 as more smaller, independent lenders invite mortgage applications – but that’s still only less than half of the £44 billion advanced to landlords every year at the peak of the housing bubble.
Last week, independent finance house Crystal Mortgages kicked off a campaign to increase buy to let lending.
“We think the buy-to-let market is around £12 billion now. The size of the market was £44 billion when the credit crunch occurred, so that figure is a bubble. Halfway towards that seems like a sustainable number,” Cleary told Mortgage Introducer magazine.
“That strip of growth could fuel quite significant growth in the bridging market over the next few years. There are of course other areas that could come alongside to help the bridging market grow, but we certainly see this as a growth story for this market for the next five years.”
Independent lenders who previously lent money short-term as bridging loans are looking at longer-term buy to let loans as the bridging market has dried up due to banks and building societies changing their lending rules to stop quick remortgages.
The largest lender in this market was Mortgage Express, now owned by the government’s toxic loan company.
“The buy-to-let market and private rented sector looks like it’s going to gain some strength over the next cycle. Consumer demand for rented property is already apparent and I think bridging lenders are in the market offering products that cater to landlords’ demand. This is the most obvious part of the mortgage market that will help bridging and short-term lenders grow,” said Cleary.
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