Buy-to-let lending falls

The number of buy-to-let mortgage deals being agreed slumped during the first half of the year, as the sector succumbed to the wider market slowdown.

Figures from the Council of Mortgage Lenders (CML) show 144,600 new buy-to-let loans were agreed in the first half of 2008, down from 176,500 in the second half of 2007 and 169,500 in the first half of 2007.

This represents falls of 22 per cent and 17 per cent respectively.

The figures supported those released earlier by buy-to-let lender Paragon, which reveal just 14 per cent of landlords are presently looking to expand their property portfolio.

However, despite the short-term slowdown, the number of buy-to-let mortgages outstanding continues to rise.

According to CML figures, there are now 1,103,000 buy-to-let mortgages in the UK, with an estimated total worth of £132.5 billion.

This represents a rise of 19 per cent by volume and 25 per cent by value from a year ago.

As a result, buy-to-let mortgages represent nine per cent of the total number of UK mortgages outstanding and 11 per cent of the value of mortgage stock.

"The shortage of mortgage funding is creating similar problems for buy-to-let landlords as it is for other borrowers," explained CML director general Michael Coogan.

"However, we expect the rental market to remain underpinned by strong demand, partly because some people who would like to buy a home are being forced to carry on renting for now."

Up to 1.1 per cent of buy-to-let mortgages are over three months in arrears - up from 0.73 per cent in the second half of 2007 and 0.63 per cent in the first half of 2007.

This compares with 1.33 per cent in the wider mortgage market.

Chris O'Toole