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Despite evidence of some slowing in the general housing market the buy to let market has remained relatively strong. Indeed, borrowers took out 171,800 new buy-to-let mortgages, worth £21.2 billion, in H1 £2007, according to new CML (Council of Mortgage Lenders) data.
By the end of June, the number of buy-to-let loans outstanding had reached a record 938,500. The value of outstanding loans totalled £108 billion - also a record and an increase of 14% on H2 2006. Buy-to-let lending now accounts for 10% of mortgage balances, compared to just 3% five years ago.
The number of loans taken out in H1 was 3% lower than in H2 2006. But over the same period there was a modest 2% growth in the value of new buy-to-let lending, driven mainly by higher property values.
Although the rate of growth of the buy-to-let sector slowed in the first half of this year, it was stronger than in the wider mortgage market, in which the value of lending declined by 4%. As a result, buy-to-let lending accounted for 12% of all advances in the first half of this year, the highest proportion seen to date.
A strong rental market, in which landlords are reporting rising rents and shorter void periods, helped ensure that buy-to-let arrears remained lower than in the wider mortgage market.
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The number of buy-to-let mortgages in arrears of more than three months rose modestly to 0.63% from 0.58% in H2 2006. But the figure remains significantly lower than in the wider mortgage market (1.06%).
Repossessions of buy-to-let properties also nudged upwards to 0.08%, from 0.06% in H1 2006. Again, however, repos were lower than in the mainstream mortgage market (0.12%).
The typical maximum aggregate loan that lenders were prepared to make to a single investor increased to £2.5 million, reflecting rising property prices and the continuing confidence of lenders in the sector.
15 August 2007 © Moneyextra.com
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