The value of home loans in the UK to fund buy-to-let purchases increased by a third in the first quarter, as the sector becomes attractive to investors due to falling home prices and rising rents.
According to latest figures by the Council of Mortgage Lenders (CML), some 32,300 mortgages with a combined value of approximately £3.7 billion (S$7.5 billion) were advanced to buy-to-let borrowers. The value declined five percent in Q4 2011 but soared 32 percent in the first three months of this year. However, CML said it remains about a third of the level in 2007.
“The year-on-year rise in buy-to-let lending reflects the state of the overall property market. Demand for rental property is as strong as ever as mortgage funds remain out of reach for many would-be buyers and high-street banks remove scores of owner-occupier mortgages from the market,” said David Whittaker, Managing Director of Mortgages For Business.
“While the overall value of lending fell quarter-on-quarter, this has more to do with stagnant and falling prices rather than a drop in landlord appetite.”
CML noted that shares of the buy-to-let sector continued to grow in the mortgage market, with the 1.4 million buy-to-let mortgages in the UK representing approximately 12.8 percent of total outstanding mortgages.
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