New buy-to-let lending in the first quarter of this year totalled £3.7billion (32,300 loans), according to the Council of Mortgage Lenders.This was 5% down on the fourth quarter of 2011. While 32% higher than in the first quarter of 2011, buy-to-let lending is still only around a third of its 2007 levels.
Buy-to-let lending for house purchase in the first quarter fell by a greater amount (9%) than remortgaging (1%), but both were around 30% higher than in the first quarter of 2011. The buy-to-let sector continues to increase its share of the mortgage market, with buy-to-let mortgages representing an estimated 12.8% of the total value of outstanding mortgages at the end of the first quarter, up from 12.6% at the end of 2011 and 12.2% at the end of the first quarter of 2011. The total number of buy-to-let mortgages stands at just over 1.4 million, with a total value of £159.4billion.
The average maximum loan-to-value available from lenders on buy-to-let mortgages remained at 75% in the first quarter of the year, with the average minimum rental cover 125% – up from 123% in the previous quarter, but otherwise the same as for nearly three years.
In terms of loan performance, the number of buy-to-let mortgages in arrears fell a little in the first quarter of 2012, and the arrears rate on buy-to-let mortgages continues to be lower than in the owner-occupied sector. At the end of the first quarter, around 1.7% of buy-to-let mortgages were in arrears of more than three months (including cases where a receiver of rent has been appointed), compared with around 2% of owner-occupier mortgages.
The repossession rate was 0.12% – virtually the same as for the last five quarters – compared with 0.08% in the owner-occupied sector. It is not surprising that the buy-to-let repossession rate is higher than in the owner-occupier sector, where the focus is on forbearance and trying to keep home-owners in their homes. In the rented sector, expired tenancies allow repossession to be undertaken without unexpected disruption to tenant households. In absolute terms, the number of buy-to-let repossessions remains only a small proportion of total repossessions.
CML director general Paul Smee said: "Even though buy-to-let lending is running at only around a third of its peak levels, the sector is continuing its gradual expansion. It has become an important part of the overall landscape of housing provision in the UK."