BTL lending represented 13% of total gross mortgage lending in 2014, with gross advances having recovered from its post-crisis trough - though still below its 2007 peak. BTL mortgages accounted for 15% of the total outstanding value of UK-resident mortgages as at end-2014 Q4.
Gross lending for BTL purposes has grown since 2010, reflecting both supply and demand factors, and was £27.4 billion in 2014.
Over the past five years the share of total BTL lending in overall mortgage lending has picked up to 15% in 2014 Q4, higher than in the pre-crisis period, according to data from the CML. Data from the Bank of England and FCA also show that gross BTL lending grew faster than overall gross mortgage lending in recent years. Contacts of the Bank’s network of Agents noted that the rental market had continued to grow strongly in recent months, supporting continued steady growth in buy-to-let activity.
Gross buy-to-let advances for remortgaging have also increased in recent years. Its share of the total grew from 32% in 2002 to 52% in 2014, with the share of gross advances for house purchase at 45%.
Overall mortgage approvals also rose slightly in the three months to February compared to the previous period. Approvals for remortgaging rose slightly, and the stock of secured lending to households increased, but the pace of growth has slowed since 2014 H1.
Quoted fixed mortgage rates, which are indicators of the rate offered to borrowers, fell in 2015 Q1 compared to the previous quarter. Lower rates on 75% loan to value fixed-rate mortgages reflected falls in swap rates - spreads were little changed.
However quoted fixed rates on 95% LTV mortgages fell more sharply and spreads narrowed. In recent discussions, some major UK lenders noted increased competition for higher LTV mortgage business.
Jonathan Harris, director of mortgage broker Anderson Harris, commented:
"Mortgage approvals continue their moderate rise, as the mainstream market remains largely unaffected by the uncertainty created by the general election while the upper end of the market takes a pause.
"With the Bank of England uncertain as to when interest rates will rise, what chance do mere borrowers have? The vast majority are opting for fixed rates to give them some certainty and with lenders reducing those further in recent weeks, we are seeing the cheapest deals in a generation.
"Buy-to-let is the real lending success story, seeing a huge improvement in terms of deals available, rates and relaxing of criteria since the downturn. While lenders abandoned the market in their droves after the onset of the financial crisis, they are well and truly back, and with pension freedoms introduced this month, many are sensing further opportunities."
Patrick Bamford, Business Development Director - Genworth Financial, said:
“According to the lenders cited in the report – the big six – demand for secured lending ‘fell significantly’ in the three months to early March 2015 and this certainly ties in with the market data over that period which shows something of a slowdown.
"However, mortgage pricing has fallen during the three-month period and the report states that quoted fixed rates on 95% LTV mortgages fell more sharply than others. It also suggests that some of the lenders ‘noted increased competition for higher LTV mortgage business’.
“While we welcome any increase in competition in the high LTV market it has been clear for some time that first-time buyers have continued difficulties in saving the necessary deposit to secure such a mortgage, and the tightening of affordability measures brought in by the Mortgage Market Review continue to mean high LTV mortgage take-up remains challenging.
“The Help to Buy Scheme certainly added much-needed impetus to the availability of high LTV mortgages, particularly to first-time buyers, and those operating outside the scheme have also utilised private mortgage insurance in order to add to the product depth. The problem however remains that this is a short-term solution – Help to Buy 2 is due to finish at the end of 2016 – and there needs to be a permanent solution put in place in order to ensure that the number of high LTV products does not fall off a cliff in just over 18 months’ time.
“With the General Election adding a further degree of uncertainty to the housing and mortgage markets, we need a period of stability and certainty, and much more focus on increasing housing supply, if we are not to see further falls in mortgage availability and subsequently far less first-timers making it onto the first rung of the property ladder.”
