Five year low for buy to let mortgage loans
March 13, 2009
Recently released data has shown that mortgages for buy to let properties have now fallen to a five year low, as the market continues to restrict and mortgage lenders continue to try and reduce their risks when it comes to mortgage lending.
Both demand and supply for mortgages in the buy to let sector is said to have fallen over recent months, and the Council of Mortgage Lenders has stated that in the final quarter of last year around 37,000 buy to let loans were advanced.
The combined value for all buy to let advances in the final quarter of last year came to just under £4 billion, and according to the figures this reflected a drop of almost 20 percent compared to the third quarter of last year. The drop in volume between the two quarters was around 12 percent according to the figures. It is thought by officials at the CML that these are the lowest buy to let figures released since 2003, putting the figures at a five year low.
An excess of rental properties in many areas and an increase in void properties has resulted in an increase in payment problems on buy to let mortgages. There was an increase of over 2.3 percent in buy to let mortgages that were over three months in arrears. In 2007 buy to let mortgages accounted for around 12.3 percent of all mortgage advances, but in 2008 this figure fell to 10.6 percent.
However, the CML has also said that some landlords will now be able to benefit from lower mortgage repayments as a result of the sharp cuts in the base interest rate over recent months.
It added: “With tenant demand remaining strong in most areas, many landlords will therefore be experiencing an improvement in their net income.”
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