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More B2L growth as capital markets open

You can’t fail to have noticed the renaissance of buy-to-let over the past year or so.

Bob Young

Some of the reasons behind this have been well documented, such as strong rental demand from those who have had ownership dreams postponed.

But there have been other developments behind the scenes that are also responsible, chief among these is that the capital markets are beginning to reopen.

Data from Bloomberg shows Credit Suisse sold bonds backed by £340m of non-conforming home loans in early March, which hints that investor appetite for this type of UK residential mortgage-backed security is making a return.

If capital markets continue to improve, lenders will be able to accelerate the deleveraging of their mortgage books, which will free up capital for new lending.

Although there is no guarantee funds would be diverted towards buy-to-let, its strong performance allied with healthy margins make it an attractive proposition.

Deleveraging has been a buzz word this year as lenders seek to improve the risk profile of their mortgage books.

We have already seen industry figureheads such as Home Funding chief executive Tony Ward leading the way and if other lending institutions are able to follow suit we could see the buy-to-let market kick into an even higher gear.

Rental demand is unlikely to quieten so with other factors falling into place at the right time, the private rented sector is well positioned for further growth.

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