Buy-to-let borrowing stays on even keel

The latest buy-to-let figures find the average monthly total of actual loans has risen by 30% compared to the previous six months. However, the average loan at £82,141 was only 2.4% more than the previous average of £80,100.

These are the latest findings from the Association of Residential Letting Agents Survey of Trends, compiled for the ARLA panel of mortgage lenders.

John Crossley, chairman of ARLA, says: “When you consider the soaring house prices, this clearly demonstrates a buoyant market for investors who are taking a properly cautious attitude to their investment.”

The ARLA panel is made up of Birmingham Midshires, GMAC Residential Funding, NatWest Mortgage Services, Paragon Mortgages and Standard Life Bank.

The average loan size for prime Central London remains by far the largest of any area in the country at £198,800. This is nearly four times the average figure of £53,900 for Northwest England and North Wales and well over twice the size of the average loan for the country as a whole.

However, the average loan amount for property in Prime Central London has decreased by 2% while the rest of London has remained unchanged. Loan amounts increased in all the other regions from between 5.8% in the Southeast and 14.4% in the Southwest.

London and the Southeast still take the greatest share of all new buy-to-let mortgages with 43.9% of the national total, including Wales, Scotland and Northern Ireland. The Midlands accounts for 14.2%, the Northeast 14.2%, the Northwest with North Wales 12.6% and the Southwest with South Wales 12.8%.

The survey found that interest-only and capital and interest are the only two payment types of any significance with buy-to-let mortgages. Overall, the figures split 64.2% for interest-only mortgages while 35.3% of borrowers include capital repayments.

Fixed rate mortgages are the most popular in prime Central London (52.8%) but only account for just over a third (34%) in the Northwest. In Scotland and Northern Ireland, discount rates are the most popular at 43.8%/

Tracker rates based either accounted for nearly half of all lending arrangements in the North West and North Wales.