New figures from the Council for Mortgage Lenders (CML), show the buy to let market continues to surge forward, on the back of low interest rates, low property prices and strong demand from tenants.
The figures from the CML show 40,000 buy to let mortgages were granted in the second quarter of the year, totalling just over £5 billion. Both figures are at their highest levels since 2008, when the market was being ravaged by the twin effects of the financial crisis and the credit crunch.
The new data also revealed:
- The number of loans advanced in the second quarter of 2013 was 19% higher than in the first three months of the year
- Whilst the value of the mortgages granted was 21% higher than in the first quarter of the year
- Growth in buy to let remortgages is even stronger, up by 24% by volume, over the same time periods
The CML revealed almost half of buy-to-let mortgages were advanced to borrowers who wanted to purchase an investment property, up 15% on the previous quarter. .
The figures also showed that at the end of June buy-to-let mortgages accounted for 13.3% of lending in the UK, a slight rise on the previous quarter.
Surge in buy to let lending
Financial experts believe the rise in buy to let lending is due to a number of factors.
Firstly, the current low interest rates is having a double effect, reducing the return from savings accounts, whilst making buy to let mortgages more affordable.
Secondly, house prices are down on their pre-credit crunch levels.
Finally, despite the efforts to help first time buyers onto the property ladder demand for good quality rented accommodation still seems to be outstripping supply.
Commenting on the figures, Jackie Bennett, the CML’s Head of Policy, said: “Strong rental demand is contributing to the continuing expansion of the 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, as well as helping to fund increased activity in the mortgage market more generally. This spring, we have seen the highest levels of lending to first-time buyers since 2007, alongside the continuing recovery in the buy-to-let market.” (Source: CML)
The announcement from Mark Carney earlier this week, that interest rates will still low until unemployment reaches 7%, which should take around three years, will give a further boost to the buy to let market as savers look to invest in areas which will provide them with a real return above inflation.
Are you considering a buy to let investment?
If you are fed up of low savings interest rates and are considering a buy to let property as an alternative we are here to help.
Our mortgage adviser, Linda Wood, is experienced in advising clients on the pros and cons of buy to let and is here to help you.
Your property may be repossessed if you do not keep up repayments on your mortgage.
For providing mortgage advice we will charge an application fee of £300 and we may also be paid a fee from the lender, any fee paid by the lender will be disclosed to you. Alternatively we will charge an arrangement fee of 0.5% of the loan and refund to you any payment received by us from the lender.