Demand for buy-to-let lending has spiked through 2015, but particularly over the past three months according to Bank of England data.
This drop is being attributed to a combination of low mortgage rates and upcoming changes in tax relief.
The Bank’s Credit Conditions Survey for the third quarter of 2015 found that lenders reported demand for secured lending for house purchase increased significantly, particularly for buy-to-let.
This data tallies with that published this week by other bodies including the CML that witnesses a significant uptick in buy-to-let lending during August compared to the previous year.
The uptick was driven mainly by buy-to-let remortgaging, which was up 73 per cent while buy-to-let purchasing was up 40 per cent year-on-year. According to the CML this was partly because buy-to-let lending declined more than homeowner lending during the downturn.
Figures showed that while loans to homeowners for house purchase declined by 50 per cent in volume terms from 2007 to 2009, buy-to-let loans for house purchase declined by 71 per cent.
Andrew Turner, director of Commercial Trust, said the uptick could be related to landlords preparing for new rules introduced by George Osborne, which means that from April 2017 tax relief on mortgage interest will be restricted to the basic rate.
Mr Turner said: “Recently, landlords have been seeking ways to cancel out the loss in tax relief. Many have been fixing their rates longer where possible, and it is likely that we will continue to see an increase in buy-to-let remortgages.
“I am certain that, with strong demand from tenants and favourable interest rates, the buy-to-let sector will continue to grow.”
According to the CML data, first-time buyers, home movers and remortgaging also saw a monthly decline in lending in August, but an uptick compared to 2014 – athough none as large as buy-to-let.
Meanwhile, figures from the Office for National Statistics showed that UK house prices increased by 5.2 per cent in the year to August 2015.
Adviser view
Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “There is a significant head of steam building in the remortgage market.
“Sooner or later, the predictions of an interest rate rise are going to come true, and existing borrowers would be best off not waiting until the last minute to find out if they can move onto a better rate.”
