Confidence in buy-to-let market continues to grow

Wednesday, 15, Aug 2007 10:12

Landlords have taken out 171,888 new buy-to-let mortgages in the first six months of 2007, as confidence in the rental market continues to grow.

The value of buy-to-let mortgages now stands at £108 billion in the UK, with a total of 938,500 outstanding, according to research by the Council of Mortgage Lenders (CML) released today.

Some £21.2 billion worth of new loans were issued in the six months to July.

However, compared to the second half of 2006 the number of loans taken out fell by three per cent in first six months of the year, but the overall value of the market has grown by two per cent.

This reflects a trend amongst landlords to take out buy-to-let mortgages on higher value properties.

Lenders are now willing to lend a maximum of £2.5 million to a single investor, reflecting recent increases in property prices and the confidence of lenders in the market, according to the CML.

However there are also some worrying indicators.

Repossessions in the buy-to-let market increased slightly in the six months to July, up from 0.06 per cent to 0.08 per cent.

However, this is lower than the market as a whole, which has a repossession rate of 0.12 per cent.

The number of buy-to-let mortgages that have been in arrears for more than three months also saw an increase to 0.63 per cent, up from 0.58 per cent in the last six months of 2006.