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BTL lending up to £24.1bn in H2 2007

Buy-to-let lending totalled £24.1bn in the second half of 2007, up from £20.8bn at the same time in 2006, says the Council of Mortgage Lenders.

This was also up from £21.2bn in the first half of the year.

The number of loans to BTL landlords in the second half of the year was 179,100, up from 171,800 in the first half of the year and 177,200 in the second half of 2006.

The total number of outstanding BTL mortgages has now passed the million mark, standing at 1,038,000 at the end of 2007 – nearly 23 per cent up on the 846,900 a year earlier.

On average, at the end of 2007 lenders had an 85 per cent maximum on the percentage of the value of the property that they were willing to advance, and required rental income to amount to 120 per cent of the required mortgage payment.

Arrears remain lower than in the wider mortgage market, with 0.73 per cent of BTL loans in arrears of more than three months at the end of 2007 (up from 0.63 per cent at the end of the first half of the year, and 0.58 per cent at the end of 2006).

This compares with 1.1 per cent in the wider mortgage market. The proportion of BTL mortgages taken into possession was also smaller than in the wider market – 0.18 per cent for the year as a whole, up from 0.13 per cent in 2006 but lower than the 0.23 per cent in the wider market in 2007.

CML director general Michael Coogan says:”Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high quality homes to rent. Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market.

“Many buy-to-let loans have interest rates linked to interbank rates, so may have seen hefty increases in payments when Libor rose to abnormally high levels in the second half of 2007. These are now likely to be returning to lower levels in line with the reduction in Libor rates since December last year.

He adds:”We expect to see a continuing healthy appetite for buy-to-let finance this year, in line with continuing expected consumer demand for private rental property.”


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