Buy-to-let mortgages sees a 32% increase from last year

The CML data said although lending was 32 per cent higher than in the first quarter of 2011, it was still only a third of its 2007 levels, before the financial crisis hit. The buy-to-let sector has continued to increase its share of the mortgage market with BTL mortgages taking 12.8 per cent of the overall market at the end of the first quarter, up from 12.6 per cent at the end of 2011 and 12.2 per cent at the end of the first quarter of 2011.

David Whittaker, managing director of national advisory firm Mortgages for Businesses, said: “Demand for rental property is as strong as ever as mortgage funds remain out of reach for many would-be buyers and high-street banks remove scores of owner-occupier mortgages from the market. While the overall value of lending fell quarter-on-quarter, this has more to do with stagnant and falling prices rather than a drop in landlord appetite.”

The CML brought out a piece of research concurrently, on arrears and repossessions, which revealed that the amount of repossessions has stayed consistent at 9600 during the first three months this year.

Mark Blackwell, managing director of mortgage data analyst xit2, put this down to a more ‘tolerant’ attitude among the industry.

He said: “Mortgage lenders are being unsustainably tolerant of borrowers in arrears. Unemployment is increasing, and personal finances are being squeezed by the rising cost of living.

“This suggests repossessions should be higher, but they are being kept artificially low by lenders generous forbearance packages. Their generosity is camouflaging serious problems in borrower finances.”

However, IFAs such as Alec Ruthven, director at Somerset-based A M Ruthven & Associates, said the consistency in the repossession figures was purely down to stability of interest rates, rather than banks being more forbearing.

He added: “If interest rates do start to rise, particularly SVRs, in the next couple of years, there’ll need to be a big upturn in the economy as a whole to protect those more vulnerable homeowners from repossession.”

Martin Ward, senior mortgage adviser at Hitchin-based Consillium Financial Planning, said: “I think the factors behind these stable repossession figures are straight down the middle between homeowners adjusting to the lower base rate in the past 12 months, particularly if they are paying off their credit cards and other debts and banks easing up on repossessions.

“I went to the AGM of one building society recently, which only had one profitable repossession on its books.”