Brokers split on buy to let mortgage lending

Buy to let mortgage brokers are split on the performance of the sector since the start of the year – with one half claiming business is booming while the rest report no change.

Around 1 in 5 brokers (18%) are celebrating an increase in buy to let business of more than 10%, another 1 in 3 (28%) say business has improved between 5% and 10%, according to a study by specialist landlord lender Paragon Mortgages.

However, another 45% reported no change in buy to let business levels.

The data comes from the lender’s Financial Adviser Confidence Tracking Index that asked 200 mortgage brokers about their landlord mortgage business in the first quarter of 2011.

The index also revealed that 53% of intermediaries considered credit conditions in the buy-to-let market improved during the first quarter, with wider product availability and laxer terms.

More than half (56%) of brokers forecast that additional mortgage deals would come to the market before the end of June.

They reported the average buy to let mortgage loan-to-value was 65% – with 25% of mortgages with up to 60% LTV; 33% between 61% and 70% LTV; 31% were between 71% and 75% LTV; and 11% over 75% LTV.

John Heron, managing director of Paragon Mortgages, said: “These figures demonstrate intermediaries’ growing confidence in buy-to-let.

“Nearly half of intermediaries reported an increase in business levels during the quarter, with one in five increasing their buy-to-let business by more than 10%.

“Landlord demand is clearly strong and buy-to-let finance is becoming more readily available to meet that demand. Although we are obviously not operating at ‘normal’ market levels, buy-to-let is on the road to recovery.”

The Council of Mortgage Lenders reckons the total value of buy-to-let lending in 2010 was £10.4 billion (22% higher than in 2009), and the total number of loans advanced in the year was 102,000 (10% higher than the previous year).

In the fourth quarter of 2010 there were 28,600 new buy-to-let loans advanced, worth £3 billion. This was a rise of 6% by volume and 7% by value from the previous quarter.

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