Buy-to-let shows surprise resilience

New buy-to-let lending has dipped far less than the rest of the mortgage market, surprising the  doom-mongers who have been merrily predicting a wipe-out of the sector.

There were 144,600 new buy-to-let loans in the first half of 2008, down just 18% from 176,500 in the second half of 2007 and 169,500 in the first half of 2007.

By comparison, the number of house purchase and remortgage loans in the wider market decreased over the same period by 28%.

The number of buy-to-let mortgages outstanding continues to rise: there are now 1,103,000 buy-to-let mortgages in the UK worth £132.5 billion. This is a rise of 19% by volume and 25% by value from a year ago.

Buy-to-let mortgages represent 9% of the total number of UK mortgages outstanding and 11% of the value of mortgage stock.

On average, lenders offered a maximum loan of 83% of the value of a property in the first half of 2008, down from 85% last year.

Arrears in the buy-to-let market are currently lower than in the wider mortgage market, with 1.1% of loans over three months in arrears (up from 0.73% in the second half of 2007 and 0.63% in the first half of 2007). This compares with 1.33% in the wider mortgage market.

The proportion of buy-to-let mortgages taken into possession is the same as the wider market, at 0.16%.That equates to around 1,800 properties out of a total of more than one million mortgages outstanding.

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