MIp18_1209:MI 2008 24/11/2009 16:32 Page 12
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Buy-to-let news
Buy-to-let market grows for first time in two years
Gross lending in the buy-to-let increased by 2.5 per cent to £144.2 contributing to a continued Commenting on the newly-
mortgage market grew in the third billion. improvement in cases of buy-to-let published data, the CML's director
quarter for the first time in two Within the buy-to-let market, arrears and the number of landlords general Michael Coogan said:
years, according to data published both lending for house purchase facing enforcement action. For the “At this stage, the recovery is
by the CML.At £2.1 billion, lending and remortgaging grew in the last third quarter in a row, there was a modest - but the figures show that
was 10 per cent higher than in the three months. As with the decline in the number of buy-to-let buy-to-let is here to stay. Buy-to-let
previous three months. The third mainstream mortgage market, mortgages with arrears of more lenders are among those facing
quarter also saw a similar first however, house purchase lending than 1.5 per cent of the balance. In some of the biggest challenges in
increase in two years in the number was appreciably stronger. the last three months, the number raising mortgage funding, so the
of buy-to-let loans advanced, from Remortgaging capacity was has fallen from 22,900 to 20,500, improved figures are all the more
21,600 to 23,700. But the welcome constrained by the unavailability representing 1.7 per cent of welcome.
recovery in buy-to-let lending was during the quarter of any buy-to-let outstanding buy-to-let mortgages. “Future demand for housing in
from a low base, with current mortgages at over 80 per cent loan- The number of properties taken all tenures supported by lenders will
lending volumes sharply lower than to-value (LTV). Landlords with into possession rose in the third remain strong, despite mortgage
their peak in 2007. existing mortgages at a higher LTV quarter, from 1,400 to 1,600, funding constraints and low
The number of outstanding buy- are therefore effectively obliged to equivalent to 0.14 per cent of all construction rates. With funding
to-let loans grew to 1,205,000, stay on their existing lenders’ buy-to-let mortgages. Over the same for social housing under pressure,
representing 11 per cent of all reversion rates. But with variable period, however, there was a sharp the private rented sector has a
mortgages by the interest rates remaining low, it is decline - from 2,500 to 1,700 - in strong future. Mortgage lenders will
end of the quarter (compared relatively painless for them to do so the number of arrears cases in have an important role to play in it,
to 1,180,000 three months earlier). and there is little pressure to re- which a receiver of rent was and will continue to help improve
The value of out- finance. appointed, often as an alternative to choice and standards for private
standing buy-to-let mortgages Low borrowing costs are also seeking possession of the property. tenants.”
Buy-to-let sees signs of recovery
Buy-to-let regulation
not the answer
The buy-to-let market is not a risky
The number of buy-to-let Bank remain for landlords with a August 2007, although in the last product and regulating it could
mortgages available has increased 20 per cent deposit. If landlords few months the sector has seen have far-reaching implications for
from the all time low of 179 in want a choice of deals then at least positive signs with the number of those renting, according to
September 2009 to 239 available as a 25 per cent deposit is needed. deals available increasing from the Paragon’s MD, John Heron.
we go to press. However, there are signs the all time low of 179 in September Commenting, he said: "There has
The buy-to-let sector has been market is changing. Commenting, 09 to 239 available today. been much speculation about how
one of the biggest casualties of the Michelle Slade, spokesperson for "Many landlords' biggest buy-to-let would perform in weak
last two years, with 93 per cent of
Moneyfacts.co.uk said: problem in securing a competitive economic conditions and the
all deals disappearing in that time. "Numerous BTL lenders have deal will be finding the deposit sector has proved that it is able to
Landlords unable to find more pulled out of the sector, while needed as previous house price adapt and cope well. Like owner-
than a 20 per cent deposit can no many of the remaining lenders falls are likely to have eaten into occupiers, landlords have benefited
longer find a new deal, despite restricting the number of deals on the equity available in their from low interest rates but they are
deals requiring just a 10 per cent or offer, making it harder than ever portfolio. also experiencing strong levels of
15 per cent deposit making up 64.8 for landlords to find a "At least a 25 per cent deposit is tenant demand for their product,
per cent of the market just over competitive mortgage. needed, but in the residential which is reflected in the arrears
two years ago. Only four deals "The number of deals available market a 40 per cent deposit is performance. Buy-to-let has now
from Clydesdale and Yorkshire is a long way off the peak seen in needed to secure a good deal.” outperformed the wider mortgage
Max LTV % of total deals August 2007 % of total deals today Date Number of
market for 31 of the past 35
90% 12.8% 0.0% BTL
quarters.
85% 52.0% 0.0%
Products
"The CML’s arrears figures cast
80% 12.8% 1.4% further doubt on the perception
75% 12.6% 24.2%
available
that buy-to-let is a ‘risky' product.
70% 2.8% 21.4%
65% 5.1% 15.3% August 2007 (Peak) 3,662
These figures do not back up this
60% 1.2% 30.6%
view. On the whole, buy-to-let
50% 0.7% 7.1% 2 Years Ago 1,942
investors are financially savvy
individuals who invest for long-
August 2007 2 Years Ago 1 Year Agom Today One Year Ago 308
term - they are not speculators
Average 2 year
fixed 6.28% 6.44% 7.20% 5.71%
September 2009
looking to make quick profits."
Average 2 year
"It is clear that buy-to-let is
(Low) 179
tracker 6.35% 6.66% N/A 4.47%
fundamentally a commercial
Tracker margin
Today 239
transaction and it is essential that
above base rate 0.60% 0.91% N/A 3.97%
the FSA does not impose consumer
focused regulation."
Source:
Moneyfacts.co.uk 16.11.09
December 2009 Mortgage Introducer
www.mortgageintroducer.com
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