UK Buy-To-Let Mortgage Lending Hits £5 Billion (GBP)
The resurgence of property investment in the UK means that landlords are extending their rental property portfolios and cashing in on the strong demand for rental property from “generation rent”.
The buy-to-let boom has seen mortgage lending reach another milestone as latest figures released by the Council of Mortgage Lenders (CML) show that mortgage borrowing has hit a five-year high, and the Bank of England’s (BoE) historically low interest rates are predicted to fuel even more growth in the sector.
Buy-to-let mortgage lending has continued to excel expectations as the latest CML data shows £5.1 Billion (GBP) was advanced to landlords in the second quarter of 2013, that’s 21% up on the first quarter of the year and up 31% on 2012 figures.
The new governor of the Bank of England, Mark Carney, has indicated that interest rates are expected to remain low until at least 2016, encouraging further growth in the UK private rental sector (PRS).
It is hoped that mortgage costs will become even more attractive for buy-to-let property investors because bank interest rates remain low, attracting investment in property from a wider market due to the low returns on other assets including cash.
The UK buy-to-let market is booming just at the right time, as mortgage lending for normal residential property buyers is still fairly weak.
Landlord mortgage borrowing is still well below the £12.7 Billion (GBP) all-time high reached in the third quarter of 2007, at the very peak of the last property boom, however buy-to-let mortgages now make up 13% of gross mortgage lending in the UK, according to the CML.
The net mortgage lending figures show the real expansion of the UK private rental sector, the rate of growth of mortgage lending in the sector is calculated after capital repayments are taken into account, In the second quarter of 2013 repayments totalled £1.7 Billion (GBP), revealing that the UK net mortgage lending figure was £3.4 Billion (GBP) for the last quarter, while net lending in the wider UK mortgage market is still creeping out of negative territory.
The contrast shows how buy-to-let mortgage lending has become an area of exceptional growth for banks and mainstream mortgage lenders.
The biggest lenders attracting business from landlords and buy-to-let property investors are the Nationwide Building Society and BM Solutions (Part of the Lloyds Banking Group), with a raft of smaller lenders attempting to jump on the Buy-to-let surge, including the Coventry Building Society and Clydesdale Bank.
Jackie Bennett, Head of Policy at the CML, said: “Strong rental demand is contributing to the continuing expansion of the UK buy-to-let sector, but growth is also being helped by improved conditions in funding markets and more widespread availability of mortgages. These conditions are creating more opportunities for landlords to remortgage.”
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