Buy to Let Lending is Up – But It’s Not BoomingMake Text Bigger
The latest buy to let lending figures highlight a rise in landlord borrowing – but the statistics are shrouding an underlying trend.
Interpreting the figures comes down to some careful reading of how the Council of Mortgage Lenders (CML) reports the findings.
The CML – the UK’s major banks and building societies industry voice- trumpets that the number of new buy to let loans was up 16% in the three months ending September 30.
Read that again – new buy to let loans.
New buy to let loans includes purchases and remortgages. Drilling down into the figures reveals that 34,500 buy to let loans were advanced in the quarter – up from 29,700 in the preceding quarter.
This does not indicate more landlords are buying rental properties because only 18,580 were for a property purchase – the remaining 15,920 were landlords switching between lenders or remortgaging.
This shows landlords are buying rental homes – but the market is not expanding at the rate the figures would suggest.
In fact, the CML goes on to explain, at the height of the property bubble in 2008, 19% of buy to let loans were for buying property, while the current figure is running at 12% of total loans – a third down on the market at its peak.
The figures show the hullabaloo about a resurgent buy to let market is not exactly what some lenders would have property investors believe.
The headline figures the CML would have landlords believe are more prosaic. Besides the number of mortgages hitting a three year high, the value of buy to let lending in the quarter was up to £3.8 billion from £3.2 billion was also at the highest level since the end of 2008.
In the quarter, buy-to-let mortgages more than three months in arrears dropped from 28,300 (1.57% of the total) to 26,300 (1.45%). More properties were repossessed – from 1,500 in the second quarter to 1,600.
CML director general Paul Smee said: “With tenant demand remaining strong in the rental sector, some existing buy-to-let landlords have been expanding their portfolios and the growth that returned to the sector in the preceding quarter has continued.
“The recovery of buy-to-let from its low point in 2009 has helped improve supply and choice in the rental market. Despite recent improvements, however, buy-to-let lending volumes are still only around one-third of their former peaks.”
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