The value of new buy-to-let loans increased by 21% in the second quarter of 2011, driven almost entirely by remortgaging, and despite the surge, the market is still very low.
According to new data from the Council of Mortgage Lenders, there were 32,000 buy-to-let loans, worth £3.5bn, taken out from April to June, the highest in number and value since the last quarter of 2008.
Remortgaging accounted for 65% of the overall increase in buy-to-let lending in the quarter. The value of the 15,230 loans for remortgage, at £1.6bn, was 27% higher than in the first quarter and accounted for 53% of the total gross buy-to-let lending – up from 51% in the first quarter.
The number and value of outstanding buy-to-let mortgages continued to grow. At the end of the second quarter, 1.34 million buy-to-let mortgages, worth £154.5bn, were outstanding, up from 1.26 million, worth £148.8bn, at the end of the same period in 2010.
Although this quarter’s increase is significant, the market is still currently running at around one third of the levels seen at the peak of lending in 2007.
For the first time since 2008, arrears rates for buy-to-let mortgages are lower – albeit very slightly – than in the owner-occupied sector.
In the second quarter, all buy-to-let cases where loans were over three months in arrears (including those under control of a receiver of rent) were, at 28,100 or 2.09% of the total, 0.05 percentage points lower than in the owner-occupied sector. Repossessions in the buy-to-let sector increased by 9% from 1,700 in the first quarter to 1,900 in the second.
David Whittaker, managing director of specialist lender Mortgages for Business, said: “Landlords are basking in the glow of the BTL sector at the moment. Product numbers are up, yields are healthy and rents are in no danger of falling.
“Amid a backdrop of uncertain markets and social unrest, the BTL market is one of the few beacons of light in an otherwise depressing picture.”
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