CML: buy-to-let lending sees "substantial" increase

This increase in activity was driven by both buy-to-let house purchase and buy-to-let remortgage activity, although remortgage levels are showing greater growth.

Buy-to-let house purchase rose by 36% year-on-year while remortgage activity saw a 62% rise in the same period.

Buy-to-let lending for house purchase showed stronger year-on-year growth than home-owner loans for house purchase for most of the year, which in part is a market recovery response as buy-to-let lending declined more than home-owner lending during the downturn. While loans to home-owners for house purchase declined by 50% in volume terms from 2007 to 2009, buy-to-let loans for house purchase declined 71% in the same period. Buy-to-let currently in September represents 18% of gross lending.

Paul Smee, director general of the CML, commented:

"The market was a slow starter this year, but this quarter shows it is now firmly on an upward trajectory. With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the new year.

"Buy-to-let continues its growth this period, but at 18% of new lending in September remains the fourth largest lending type behind first-time buyers, home movers and remortgage. There were five times as many house purchase loans to home-owners as buy-to-let landlords in September, and the growth in buy-to-let lending largely continues to reflect its more belated recovery from recession.

Myles Williams, chief executive at Fast Property Finance, said:

"The standout trend in this latest mortgage data is the strength of the buy-to-let market. Buy-to-let has come into its own in recent years and is being driven by people's understanding that house price levels and supply problems are creating a significant investment opportunity.
 
“The relaxation of the pension rules and economic turbulence around the world have also resulted in greater demand for buy-to-let. Buy-to-let is an asset class that people in the UK are comfortable with and feel protects them in a way that equity-based investment never could."

Andrew Turner, director at Commercial Trust, added:

“It is positive to learn that during September, gross lending of buy-to-let, buy-to-let house purchasing and buy-to-let mortgaging have all seen strong increases from the same time the previous year, indicating favourable lending conditions across all tenures.

“It is clear that buy-to-let is continuing to show real improvement, growing far more quickly than any other type of lending and continuing its trend of being the strongest UK mortgage market in the years since the recession. Though the bulk  of both gross activity and yearly growth was remortgage loans, property purchase loans have also seen a more than modest climb – despite the continuously changing legislative environment in which landlords operate and the threat of increased buy to let regulation, both from pan-European legislation and the Bank of England itself.

“If the past few years have shown us anything, it is that buy to let has been the biggest driver of the housing market recovery, and instrumental in servicing the housing needs of the UK. Whilst it is crucial that we do not return to the risky lending conditions seen prior to the recession, it is equally crucial that we do not stifle landlords’ ability to continue to invest and provide homes we desperately need.”