Buy to Let Growing, reports Free London Mortgage Broker, London Mortgage Advice Friday, 13th November 2009

Figures released by the Council of Mortgage Lenders (CML) reveal that gross buy-to-let lending for the quarter reached £2.1bn, a 10% increase on the previous quarter and so we can say that the buy-to-let mortgage market sector grew in the third quarter of 2009 for the first time in two years.

The number of total buy-to-let mortgages outstanding increased to 1.2m, with the combined value of those loans rising by 2.5% to £144.2bn. That represents 11% of all mortgages.

The number of buy-to-let mortgages advanced also rose for the first time in two years, from 21,600 to 23,700. The upswing was however from a very low base.

Most existing buy-to-let investors are not remortgaging to a new deal at the end of their current arrangement, as the standard variable rate (SVR) they revert to with their existing lender is in most cases lower than the new buy-to-let rates available on the market. What’s more, there were no buy-to-let deals available over 80% loan to value in quarter three, so any borrower with less than 20% equity in their property had no option of remortgaging in any case.

Buy-to-let new lending and remortgaging both grew in quarter three, but new lending dominated as with the mainstream market.

In the last three months, the number of buy-to-let mortgages in arrears to the tune of more than 1.5% of the balance of the loan has fallen from 22,900 to 20,500, representing 1.7% of outstanding buy-to-let mortgages.

Continued low interest rates are helping to improve the level of arrears on buy-to-let mortgages and the number of landlords facing enforcement action has fallen.

"At this stage, the recovery is modest - but the figures show that buy-to-let is here to stay. Buy-to-let lenders are among those facing some of the biggest challenges in raising mortgage funding, so the improved figures are all the more welcome. CML director general Michael Coogan said. And continued,"Future demand for housing in all tenures supported by lenders will remain strong, despite mortgage funding constraints and low construction rates. With funding for social housing under pressure, the private rented sector has a strong future. Mortgage lenders will have an important role to play in it, and will continue to help improve choice and standards for private tenants."