Buy-to-let shows no signs of slowing: BoE

Buy-to-let shows no signs of slowing: BoE

Buy-to-let mortgage lending shows no sign of slowing down, latest figures from the Bank of England have revealed.

In the 15-page Trends In Lending report for April, the BoE said that although individual lending seemed to be slowing, BTL grew its total share of the market from 32 per cent in 2002 to 54 per cent in 2014, with the share of gross advances for house purchase at 45 per cent at the end of February.

It added: “While the number of mortgage approvals by all UK-resident mortgage lenders rose slightly in the three months to the end of February, the pace of growth has slowed since 2014”.

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Patrick Bamford, business development director, mortgage insurance Europe for Genworth, said: “While we welcome any increase in competition in the high loan-to-value market, it has been clear for some time that first-time buyers have continuing difficulties in saving the necessary deposit to secure such a mortgage.

“The tightening of affordability measures brought in by the mortgage market review continue to mean high LTV mortgage take-up remains challenging.”

The report also revealed that although many BTL products in the four years directly after the financial crisis were at LTV ratios of 75 per cent and below, the number of those advertised at 75 per cent and above had increased since mid-2013 to nearly 350.

Richard Pike, sales and marketing director for Phoebus Software, said: “The increase in buy-to-let lending figures are perhaps a reflection of the prolonged low base rate; investors see property as a relatively safe place to invest to ensure a decent return and this will ensure values do not dip substantially.

“The pension changes and the supply/demand gap in housing stock means buy-to-let lending should increase for the foreseeable future. Add to this loosening of credit policies and more lender entrants and it is a sector sure to thrive.”

Key Figures

Net lending to businesses over the three months to February was £2.6bn.

Quoted fixed rates on 95 per cent loan-to-value has fallen.

£27.4bn – total gross lending for BTL over 2014.

Source: BoE

Adviser view

In a client newsletter, national advisory firm Mortgages for Business, said: “Buy-to-let is not subject to the nerves and jitters of this spring’s homeowner mortgage market.

“Election uncertainty might be putting some people off buying a home, but in the meantime millions of tenants still need somewhere to live – and landlords are investing in new properties, as BTL mortgage rates reach new lows.

“However, when rates do rise, or if the economic recovery does slow, landlords will be in a better position to stand up to headwinds than a year ago – as their tenants’ financial health improves.”