BTL 'in rude health' after hitting £160bn mark

BTL 'in rude health' after hitting £160bn mark



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Buy-to-let lending has increased by 5 per cent in the last three months according to data published by the Council of Mortgage Lenders (CML).  

The CML report stated that lenders advanced 33,200 mortgages worth £3.9 billion from April to June, an increase  from 32,300 mortgages worth £3.7 billion pounds in the first quarter of 2012. Compared to last year the volume of loans is up 14 per cent, whilst 18 per cent more money has been lent. 

The total stock of buy-to-let mortgages has also seen a healthy growth, with the total number of outstanding loans increasing, quarter-to-quarter, from 1,405,000 worth £159.4 billion to 1,416,000 worth £160.7 billion, continuing the upward trend seen from last year.

In addition, the report confirmed that the performance of buy-to-let loans has generally improved. The proportion of borrowers who are more than three months in arrears has dropped from 1.69 per cent to 1.56 per cent between the two quarters, though in the owner-occupied sector this figure remains unchanged at 2.05 per cent. 

Dragonfly Property Finance’s CEO Jonathon Samuels saw reason to suspect that these recent figures reveal a sector “in rude health”. He went on to assert that “While the owner-occupier market is spluttering along, buy-to-let is powering ahead.

"Property is cheap to buy, owner-occupier mortgages are hard to secure and returns on deposit are dire so it's no surprise people are piling into buy-to-let.

"Buy-to-let can offer a decent income now, when people need it, and has the potential for solid capital growth in the medium to long term.”

Precise Mortgage’s Managing Director Alan Cleary concluded that this progression is down to borrowers’ recent lack of financial confidence. He mentioned that tougher tax rates along with the recent economic and Euro crises mean that “it’s no surprise that renting is in vogue right now.”

He added that “the BTL market represents a more sound investment than perhaps other sectors as there’s no need to traipse further up the LTV curve in search of higher margins,” and described BTL lending as “the natural place for lenders to go when margins are being squeezed in the prime market.”

Omni Capital’s Head of Communications Bob Sturges saw reason for those in the bridging industry to be “cheerful”, citing the “availability of funding and products” as a key part of BTL lending’s renaissance.  

He said: “Bridgers have been quick to spot and capitalise on the opportunity. For a range of reasons, many BTL investors are initially unable to secure a term loan from a specialist lender. This may be for credit profile reasons, or because the property is in an unsuitable condition. Flexible bridging loans can provide the solution.”

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