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Buy-to-let lending hits record share

POSTED: 10th June 2013
IN: Personal News
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Buy-to-let mortgage lending hits record share

undefinedBy the end of the first quarter in 2013 buy-to-let mortgages are accounting for 13.4 per cent of the overall mortgage market.

The data, recently published by the Council of Mortgage Lenders (CML), shows that by the end of March 2013, the buy-to-let market had grown from 12.9 per cent of the market 12 months earlier to 13.4 per cent.

According to the CML, the first three months of the year saw £4.2 billion worth of mortgage lending advanced to buy-to-let investors, the highest amount in a month since the credit crunch began in 2008.

The 33,500 mortgages advanced to buy-to-let landlords was £500 million up on the £3.7 billion advanced over the same period last year.

Property investors have been taking advantage of low interest rates and rising rents which are raising the rental yields available to buy-to-let investors.

Fees are being cut too, providing even more incentive for prospective buy-to-let landlords.

This means that there are now 1.46 million buy-to-let mortgages in the UK, triple the amount seen ten years ago.

Funding for Lending

The introduction of the Bank of England’s Funding for Lending Scheme (FLS) last August has caused mortgage rates to fall in both the residential and buy-to-let markets.

The scheme works by allowing lenders to borrow money at below market rates on condition that they pass on the savings to borrowers through cheaper loans.

Rental yields

Although the FLS has helped first-time buyers, it is still difficult for many people to make their first move onto the housing ladder as the average deposit required is still 20 per cent of the average asking price of a property.

This means rents are still close to the record highs seen at the end of 2012. The latest figures for April 2013 show the average cost of renting is now £736 per month, a 3.9 per cent increase on 12 months earlier, with rents rising in all regions on an annual basis.

The average rental yield is expected to reach 10.9 per cent in 2013.

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