Value of buy to let mortgages grew in Q3

The total value of buy-to-let mortgages taken out during the third quarter of 2012 hit a total of £4.2bn. This represented a rise of 8% from the £3.9bn recorded in the preceding three months, according to a report from the Council of Mortgages.

Advances

In terms of loans, 34,400 were advanced in the three months to September, 2% more than the 33,600 in the second quarter of 2012. Further data from the investigation shows that buy-to-let lending during the opening nine months of 2012 amounted to £11.8bn, 19% greater than the same period in 2011.[1]

However, buy-to-let lending is still likely to total just one-third of its peak in 2007 by the end of this year.

Gaps between buy-to-let lending for house purchase and remortgaging during the third quarter remained relatively unchanged. Lenders advanced 18,680 loans for house purchase, accounting for 54% of the total amount. For remortgaging, 15,360 loans were advanced, accounting for 45%. Values for both types of lending were equally split, with £2.03bn advanced for house purchase and remortgaging. [1]

Stocks

For buy-to-let mortgaging, the average maximum loan-to-value available stayed at 75%, with a typical minimum rental cover of 125%.

The stock of buy-to-let mortgages however continues to rise. At the conclusion of the third quarter, the total number of outstanding loans amounted to 1,444,000, worth a value of £164.3bn. This was up from 1,414,000 or £162.5bn at the end of the second quarter and from 1,367,000, worth £156.7bn one year ago.[1]

‘Buy-to-let lending is continuing to recover and to grow in line with expectations,’ noted Paul Smee of the Council of Mortgage Lenders. ‘As well as continuing to fund owner-occupation, lenders are contributing to the expansion of a strongly growing rental sector, helping to deliver choice and mobility for tenants.’[1]

He added that, ‘the growth of private renting looks set to continue in the years ahead and lenders are committed to playing a full part in the debate about how best to meet the evolving needs of tenants in the future.’[1]

Value of buy to let mortgages grew in Q3Success

David Whittaker of Mortgages for Business also said, ‘landlords are the big winners in the current market as the virtous circle they’ve enjoyed over the last two years continues to turn. Lending to owner-occupiers is still some 4pc lower than last year leaving demand for rented accommodation undiminished.’[1]

‘This demand continues to push up rents and keeps first time buyers locked out of the sales market. Low sales activity has suppressed property prices and encouraged further buy-to-let investment. With the rates of return currently available it’s unlikely we’ll see a drop in BTL activity over the next twelve months.

“Gross yields rose on all property types apart from semi-commercial over the last quarter, with vanilla buy to let yields increasing from 6.1pc in Q2 to 6.7pc meaning even landlords uninterested in getting involved in more complex investments have the opportunity for healthy returns,’ he added.[1]

[1]https://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9664434/Value-of-buy-to-let-mortgages-continued-to-grow-in-the-third-quarter.html