Buy to let lending increases (12/02/2010)

New buy-to-let lending increased for the second consecutive quarter at the end of 2009, according to figures released by the Council of Mortgage Lenders in February.

    There were 25,800 new loans advanced in the fourth quarter, up from 23,700 in the third, though down from 38,000 in the fourth quarter of 2008. The 2009 growth comes from a very low base that had consistently declined through seven consecutive quarters.

    There were 93,500 buy-to-let loans advanced in 2009, a 58 Per cent drop from 2008 (222,700), and the lowest annual volume advanced since 2001. Buy-to-let gross lending was £8.5 billion, down from £27.2 billion in 2008. While buy-to-let lending represented only 5.9 Per cent of all lending in 2009 (10.7 Per cent in 2008), the total value of outstanding buy-to-let loans still represented about 11.8 Per cent of the mortgage market.

    CML Director General Michael Coogan said: "The figures show that the buy-to-let market continued to improve, albeit slowly, throughout 2009, and we are encouraged by this recovery. The new business market remains well below previous levels though, and below the level of activity which is needed to enhance a vibrant private rental sector in the UK.”

    All types of buy-to-let lending increased in the last three months of 2009. For 2009 as a whole, 60 Per cent of buy-to-let lending was for house purchase, compared to just 46 Per cent in 2008. The number of buy-to-let properties taken into possession in the fourth quarter fell by 25 per cent from quarter three but rose 9 per cent from quarter four 2008. 1,200 properties – 0.10 per cent of the total buy-to-let book – were taken into possession compared to 1,600 in quarter three and 1,100 in quarter four 2008. Overall in 2009, there were 5,700 possessions (0.46 per cent of the total book). This is similar to the 0.42 per cent annual possession rate forthe wider mortgage market.

By Andy Stern

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