BTL lending tops one million mark in 2007, says CML
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Data from the Council of Mortgage Lenders has revealed a rise in buy-to-let lending in the second half of 2007, pushing the number of outstanding buy-to-let mortgages over the one million mark.
The figures show a £2.9bn increase from the first half of the year as a result of 179,100 loans and remortgages to buy-to-let investors, which represents a rise of 7,300 loans.
At the end of 2007, lenders had an average 85% LTV cap on the percentage of the value of the property that they were willing to advance, and required rental income to amount to 120% of the required mortgage payment.
The CML says arrears remain lower than in the wider mortgage market, with 0.73% of buy-to-let loans in arrears of more than three months at the end of 2007. This is up from 0.63% at the end of the first half of the year, and 0.58% at the end of 2006).
This compares with 1.1% in the wider mortgage market.
The proportion of buy-to-let mortgages taken into possession was also smaller than in the wider market - 0.18% for the year as a whole, up from 0.13% in 2006 but lower than the 0.23% in the wider market in 2007.
Michael Coogan, director general of the CML, says: "Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high quality homes to rent. Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market.
"Many buy-to-let loans have interest rates linked to interbank rates, so may have seen hefty increases in payments when Libor rose to abnormally high levels in the second half of 2007. These are now likely to be returning to lower levels in line with the reduction in Libor rates since December last year.
"We expect to see a continuing healthy appetite for buy-to-let finance this year, in line with continuing expected consumer demand for private rental property."
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