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Buy-to-Let lending rise reflects rental confidence

Posted on 2015-06-17

Reports detailing the growth of the rental sector continue to be published thick and fast. One of the most high profile pieces of research – published by the Intermediary Mortgage Lenders Association last year – predicted that over half of the population would become renters by 2032.

As people find it harder to buy, demand for rental property continues to increase which subsequently creates more opportunities for landlords. The buy-to-let mortgage industry is central to helping new and existing landlords take advantage of this rental demand.

The figures for this sector over the last six months have been extremely positive, demonstrating that stability and confidence in the buy-to-let mortgage market and the wider rental industry are here to stay.

Let’s take a closer look at the stats…

Last month the Council of Mortgage Lenders (CML) - the UK mortgage sector’s trade association - reported that there were over 18,000 buy-to-let loans in March, 12% higher than the previous month’s findings and 21% higher when compared to March last year.

The total value of these loans was almost £3 billion, a 35% increase in value when pitted against March 2014.

To demonstrate the long-term picture, the CML also published some quarterly figures. During Q1 2015, there were a total of 52,300 buy-to-let loans, 15% more than the same period last year.

When analysing these figures, the CML’s director general, Paul Smee, said he would be keeping a close eye on the housing market to see how it reacts to a ‘reduction in the risk of a prolonged period of market uncertainty’ now that general election is over and we have a majority Government.

Interestingly, despite a lean property period reported by estate and letting agents as well as research houses in the lead up to the election, the figures above show that buy-to-let lending was largely unaffected.

What’s more, the period preceding the early months of 2015 was also a positive one. Buy-to-let mortgages in December totalled 17,300, the CML reported, which represented another huge rise in lending – 18% higher than the number recorded in December 2013.

These loans totalled £2.5 billion in value - an even larger 32 per cent rise compared to December 2013.

As you can see, the number of buy-to-let loans has been increasing steadily for some time now. On top of this, the number of buy-to-let mortgage products is also on the up. In April, Mortgages for Business reported that there was an average of 839 buy-to-let mortgage products from 31 active lenders on the market in Q1 2015, up 21 products on the previous quarter.

For anyone thinking about becoming a landlord or expanding their existing portfolio, it’s clear that confidence is high in the rental sector. And as Paul Smee muses, once the impact of last month’s general election has been analysed, these figures could be even more impressive…

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