Lenders advance £2bn to landlords in June

Lenders advanced £2bn to landlords in July, an 11 per cent increase on the £1.8bn advanced in June , according to new monthly buy-to-let data published by the Council of Mortgage Lenders last week.

The £2bn advanced in July is made up of £900m for house purchase – with the number of loans totalling 7,600 loans – and £1.1bn in remortgage lending, totalling 7,200 loans.

The number of loans for house purchase in July was 6.7 per cent up on the 7,120 loans advanced in July, while gross lending for house purchase was up 12.5 per cent on the £800m advanced the month before.

The number of loans for remortgage purposes was up 13.4 per cent up on the 6,350 loans advanced in July, while gross lending was up 23.6 per cent on the £890m advanced in June.

This is the first time the CML has published buy-to-let lending on a monthly basis, as it previously only published buy-to-let data on a quarterly basis.

Capital Economics property economist Matthew Pointon says that while the buy-to-let sector is growing, it is doing so at a slower pace than the wider mortgage market.

He says: “Demand for buy-to-let is being held by by capital values that look overvalued and limited prospects for future rent inflation. We therefore remain of the view that lending to buy-to-let investors will not outperform that of the wider mortgage market.”

Last month the CML published an estimate of residential gross lending, in which it said lenders had advanced £16.7bn to borrowers, its highest level since October 2008 and a 29 per cent increase on the previous July. The trade body then provides a detailed breakdown of gross lending within weeks of publishing its estimate.

The breakdown shows lenders advanced £3.5bn to first-time buyers in July, up 45.8 per cent on the £2.4bn advanced in July 2012. The number of loans advanced to first-time buyers in July totalled 25,300, up 40.6 per cent on the 18,000 advanced a year ago.

The typical first-time buyers loan size was £117,038 in July, up from £110,000 a year ago, while the average income of first-time buyers increased from £34,936 in July 2012 to £36,142 in July this year.

Affordability for first-time buyers improved from June to July, with the average income multiple falling from 3.33 to 3.31. However, on an annual basis loans were less affordable for borrowers, with the average income multiple being 3.24 times the typical borrower’s income in July last year.

Mortgages for Business managing director David Whittaker says: “Lenders are now more accommodating to high LTV borrowers, which has opened the door to thousands of buyers who were shut out of the market prior to this year. But first-time buyer levels are still low by historic standards, which is keeping demand high in the rental sector and returns high for landlords.”