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Buy-to-let lending increased in the second quarter

Published: 9 August 2012

Buy-to-let lending increased by 5% in the second quarter of 2012, according to data published today by the Council of Mortgage Lenders. In the three months to June, lenders advanced 33,200 loans, worth £3.9 billion (up from 32,300 mortgages, worth £3.7 billion in the first quarter). Year-on-year, the buy-to-let market continued to grow strongly, with the volume of loans up 14% (from 29,100) and the amount advanced up 18% (from £3.3 billion).

Growth in buy-to-let lending was evenly split between loans for house purchase and remortgaging, with both showing a 3% increase by volume over the first quarter. Year-on-year, lending for house purchase has grown more strongly (up 17% by volume and 21% by value) than remortgaging (up 10% by volume and 15% by value). However, buy-to-let lending is continuing to recover from a low point in 2009, and lending volumes remain around one-third of their peak in 2007.

The stock of buy-to-let mortgages continues to grow. At the end of the second quarter, the number of outstanding loans totalled 1,416,000, worth £160.7 billion (up from 1,405,000, worth £159.4 billion at the end of the first quarter, and from 1,338,000, worth £153 billion a year earlier).

The average maximum loan-to-value available on buy-to-let mortgages remained at 75%, with average minimum rental cover at 125%. Both have been broadly unchanged for the last three years.

The data showed a slight improvement in the performance of buy-to-let loans, with the proportion of borrowers more than three months in arrears declining from 1.69% at the end of the first quarter to 1.56% at the end of June (in the owner-occupied sector, the proportion was unchanged at 2.05%). 

The proportion of buy-to-let properties taken into possession was unchanged at 0.12%, while in the owner-occupied sector the data showed a small decline (from 0.08% to 0.07%). It is not surprising, however, to see a lower rate in owner-occupied households, where there is a concerted effort to extend forbearance wherever possible.

Commenting on the data, CML director general Paul Smee said:

"Buy-to-let is continuing to show signs of recovery, and growing broadly in line with expectations. The rental sector has grown strongly over the last decade or so, and buy-to-let continues to help deliver a wider choice for tenants."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.2 million mortgages in the UK, with loans worth over £1.2 trillion.

2. CML buy-to-let data for the third quarter of 2012 will be published on 8 November 2012.

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