Buy-to-let mortgage lending has reached a four-year high
Buy-to-let mortgage lending has reached a four-year high as activity in the market continues to recover from its low base, lenders said today.
Some £4.2 billion worth of buy-to-let mortgages were taken out in the third quarter of this year, representing the highest amount seen since autumn 2008, the Council of Mortgage Lenders (CML) said.
Lending to this sector has been almost a fifth higher this year so far than it was last year, with loans worth £11.8 billion advanced during 2012.
However, the CML said activity is still "subdued" compared with the pre-credit crunch era and buy-to-let lending this year is likely to total a little over one third of its 2007 peak.
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Interest in the buy-to-let market has increased as private rents have rocketed due to demand from trapped tenants who are unable to get on the property ladder, either because they cannot meet toughened borrowing criteria or raise a large enough deposit.
Recent research from lettings agent network LSL Property Services, which owns national chains Your Move and Reeds Rains, found that typical rents reached a new high of £741 a month in September, and in London they soared to £1,092.
Ed Stansfield, chief property economist at Capital Economics, said the CML's figures suggest that the supply of private rented property is "barely growing", which does not offer much hope to tenants looking for a wider range of homes to choose from.
Of the 34,400 buy-to-let loans advanced in the three months to the end of September, almost half (45 per cent) were for remortgaging, not for buying a new property.
Mr Stansfield said: "The lending data suggest that the supply of private rented property is barely growing.
"That is not good news for current or prospective tenants hoping for a larger degree of choice.
"Nor is there much prospect of a rapid rebound in buy-to-let activity next year. Rents already appear to be at or close to the limit of what households can afford given the squeeze on real incomes."
CML director general Paul Smee said lenders are committed to "playing a full part" in debates about how best to meet tenants' needs as demand for rental homes grows.