Buy-to-Let Continues to Thrive
Buy-to-let lending continued to grow strongly, with more than 58,000 loans, worth £5.5 billion, taken out in the first six months of this year. The latest figures increase the estimated total of residential investment mortgages to 233,000, worth a total of £19.1 billion. More than one-third of new advances in the first half of this year were remortgages from other lenders. In the preceding six months, 42,000 loans, worth £4.1 billion, were arranged.
The CML figures show that the average maximum loan-to-value requirement in the sector remains unchanged at 80% for the third successive half-year. Typically, lenders expect rental income to cover mortgage payments by at least 130%, a ratio that has not changed since the CML began collating buy-to-let figures in 1998.
Arrears in the sector also improved slightly in the first half of this year. The percentage of mortgages three months or more in arrears stood at 0.5% (0.55% in the second half of last year), less than half the level for residential mortgages generally.
Commenting on the latest figures, the CML's Director General Michael Coogan said:
"Against the backdrop of recent stock market turbulence, it is not surprising that the buy-to-let market has grown strongly. Although rental yields are falling in some areas, landlords are continuing to find buy-to-let attractive and are not having any significant problems in meeting their mortgage payments. The sector continues to offer good prospects over the long term, but borrowers need to continue to take a realistic view of the risks, as well as the rewards. Fundamentally, the buy-to-let sector remains sound, and we expect it to continue to be popular in the future."
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