Buy Let Mortgages on Increase

14th of February, 2011 Bookmark and Share
Buy-to-let lending was up 22% in 2010 compared to 2009 and stood at £10.4 billion with 102,000 buy let mortgages UK - wide being granted. The buy-to-let sector has also seen significant improvement in loan performance with a reduction in the number of those falling into arrears.

The historic low interest rates of the bank of England having a base rate of 0.5%, its lowest since records began in 1694, has been a key driver in improving arrears performance. The Council of Mortgage Lenders predicts strong growth in the buy let sector with an increasing demand for rentals due partly to the barrier to entry of needing a large deposit to purchase a buy to let mortgage. The majority of lenders still seek a 70-75% deposit although further entrants have come into the market recently offering 80% and even 85% deals.

In total and including buy to let mortgages, there were 529,300 residential loans advanced for house purchases worth £77.1 billion in 2010. This is a small increase of 3% when compared to 2009 but remortgaging property remained at a 13 year record low which has largely been put down to the credit crisis. New purchases were responsible for some 57% of market activity, up 9 % whilst remortgages accounted for 29%.

On the positive side there were 14,500 loans granted to first-time buyers in December, worth £1.7 billion with the typical buyer having a deposit of 23%. On average, first time buyers borrowed 3.23 times their overall income which reflects the caution still employed by many lenders when assessing the affordability and suitability of mortgage deals.
Rob Kileen