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Guard against buy-to-let novices

Brokers looking for light at the end of the tunnel would have been encouraged to see that some experts are now calling the end of the property downturn.

Their upbeat assessment of the market has been based on Bank of England figures showing a sharp rise in the number of new mortgage approvals – up by 19% to 37,937 in February.

But any delight in this revelation will have been tempered by news that the Association of Mortgage Intermediaries expects to lose 15,000 members by the end of this year.

Chris Cummings, director-general of AMI, recently told Mortgage Strategy that he expects there to be only 15 to 20 brokers of scale to be left standing after the shake-out.

We can only hope mortgage approvals continue to rise and that these translate into sales.

There is an assumption that the rise is due to landlords taking advantage of the depressed housing market to boost their property portfolios and there is nothing wrong with that.

But what must be guarded against is lending to novice speculators. The danger of doing that can be seen in the present predicament of taxpayer-owned mortgage bank Battered & Bruised, sorry Bradford & Bingley.

It has just revealed that the number of mortgage customers in arrears soared last year. One in every 22 customers is now more than three months in arrears, with worse predicted to come – and B&B was a major player in the buy-to-let market.

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