BTL up 54% year on year: CML

Buy-to-let lending saw a rise in March by both volume and value on the previous month, according the data from the CML today.

Related topics:  Specialist Lending
Amy Loddington
15th May 2014
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There were 16,200 loans advanced, up 56% compared to March 2013. The value of these loans totalled £2.2bn, up by 69% compared to March 2013. 

The number of new buy-to-let loans in the first quarter of 2014 rose slightly on the fourth quarter of 2013 to 47,000, up 1% on the previous quarter and 46% on the first quarter of 2013. The value of these loans was £6.3bn, an increase on the fourth quarter of 2013 of 3% but up 54% compared to the first quarter of 2013.

Similarly, buy-to-let lending for house purchase increased to 8,040 loans advanced, up 8% compared to February and up 46% compared to March 2013. The loans totalled £960m in March, which was up 8% on February and up 60% in value compared to the same month last year.

Buy-to-let lending for house purchase in the first quarter of 2014 followed a similar pattern to gross buy-to-let lending, remaining unchanged compared to the fourth quarter of 2013 with 23,610 loans advanced. This was however up 38% in volume compared to the first quarter of 2013. The value of these loans was £2.8bn, up 3% quarter-on-quarter but up more substantially year-on-year compared to the first quarter of 2013 by 51%.

Buy-to-let remortgage lending saw the most substantial upward trend increasing month-on-month to 8,000 loans, up 13% in volume compared to February and up 67% compared to March 2013. These buy-to-let remortgages had a total value of £1.2bn, up 13% compared to the previous month and up 73% compared to March 2013.

In quarter one of 2014, buy-to-let remortgage lending remained consistent with the previous quarter totalling 23,000 loans, an increase of 1%, but a lager year-on-year increase on the first quarter of 2013 of 55%. These loans totalled in value £3.3bn, which was again a modest increase of 3% on the fourth quarter of 2013 but up 67% on the first quarter of 2013.

Paul Smee, director general of the CML, commented:

“All types of lending show positive year-on-year growth but the rate of increase is not as frenetic as at the end of 2013. Buy-to-let lending continues to recover and regain market share.

"The FCA's new regulation of mortgages has now been introduced, but it will still be some time until we can assess its effect on the market. The industry was ready for the transition, and already actively implementing many of the changes prior to April. We do not anticipate prolonged disruption to the market as a consequence. But we still see affordability constraints as an important factor in determining the level of demand for mortgages which we see over the next year.”

Karen Bennett, Sales and Marketing Director of Commercial Mortgages at Shawbrook Bank, said:

“The continued strength of the buy-to-let sector is evidence of the ongoing economic recovery and a sign of the favourable climate that the current low interest rates have created. However, with calls from the OECD and others for more controls on the housing market, we may see rate rises sooner than anticipated. We have always advocated sensible borrowing and property investors need to look closely at their portfolio and carefully consider whether to take on more properties. They need to make sure that their portfolios will generate enough income to cover mortgages if interest rates go up suddenly.”

Andy Knee, Chief Executive of LMS, comments:

“The latest CML figures show that even before its introduction, MMR already began making changes to the market. Despite year-on-year growth, both home-owner house purchase and remortgaging loans have seen quarterly falls compared to the last quarter of 2013. Remortgaging was the first to feel the impact of MMR as lenders slowed lending in anticipation of the sweeping reforms, while a hiking of mortgage rates also discouraged many borrowers to swap deals.

“Responsible lending and affordability is clearly – and quite correctly - the phrase on everyone’s lips, but this must not come at the cost of aspiring homeowners, a group that already face steep obstacles to make the leap onto the ladder. But through effective use of MMR we can ensure the market continues to thrive, especially in the context of a stronger economic outlook with higher employment figures and lower inflation.

“A transitional period is only natural to get systems and processes geared up. Later in the year it is expected that the mortgage market will pick up, securing long and sustainable growth.”

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