New buy-to-let lending in 3.5% drop

New buy-to-let mortgage lending in the first three months of 2011 dipped by 3.5% compared with the previous quarter.

Buy-to-let lending totalled £2.9bn across 27,600 loans, compared with £3bn worth of loending across 28,600 loans in the last three months of 2010, according to the Council of Mortgage Lenders.

However, it was still up on the £2.1bn and 22,000 loans in the first quarter a year ago.

Overall, the total outstanding number of buy-to-let loans rose from 1,305,000 at the end of 2010 to 1,313,200 at the end of the March 2011, with a rise in the outstanding value of buy-to-let lending from £151.5bn to £152bn.
 
Buy-to-let lending now accounts for 12.3% of total outstanding mortgage lending by value and 11.6% of mortgages by number.

The average maximum loan-to-value ratio remained at 75%, with the average minimum rental cover requirement at 125%.

Rates of arrears are higher than the owner-occupied sector.

As at the end of March, the three-month arrears rate stood at 1.62% on buy-to-let loans where no receiver of rent was in place, and 2.24% on buy-to-let loans if receiver of rent cases were included. This compares with a three-month arrears rate of 2.15% in the owner-occupier sector.

The repossession rate on buy-to-let mortgages is also higher than in the mainstream market: 0.13% of buy-to-let loans were subject to repossession in the first quarter, compared with 0.07% of owner-occupied loans.

David Whittaker, managing director of brokerage Mortgages For Business, was unperturbed by news of the fall in buy-to-let lending, saying that the rental market is still in major growth mode.

He said: “The owner-occupier and buy-to-let mortgage markets are in much the same situation as Kate and Pippa Middleton on the big day last month. All the attention may be focused on one of them, but in reality, the junior sibling is quietly stealing the show.

“As house prices flatline, the buy-to-let market still provides excellent opportunities for investors and professional landlords. With rental demand likely to remain strong for the rest of the year, these opportunities will continue to be available.”