Buy-to-let lending plummets 69% in Q1, reveals CML
Buy-to-let lending plummeted 69% year-on-year in Q1, marking the sixth consecutive quarter fall.
There were 22,400 new buy-to-let mortgages underwritten in Q1, down from 38,000 in Q4 2008 and 72,400 in Q1 2008, according to the latest figures from the Council of Mortgage Lenders. Outstanding buy-to-let mortgages totalled 1,155,200 in Q1, down from 1,157,000 at the end of 2008.
In terms of value, buy-to-let gross advances totalled £2.1bn in Q1, down from £4bn reported in Q4 and the £9.5bn in Q1 2008. in the first quarter of last year.
Buy-to-lending accounted for 6% of all gross mortgage lending in Q1, down from 12% in Q1 2008.
Some 3.09% of buy-to-let loans were in arrears of three months or more at the end of Q1, up from 2.31% at the end of 2008 and 0.92% at the end of Q1 2008. But the CML states that this figure has been significantly inflated because of the large reduction in many borrowers' monthly payments. This is because the same given sum of arrears represents a higher number of months payments when rates fall.
The CML claims there is early evidence to suggest that the number of buy-to-let loans in arrears may have fallen in Q1 when considered as a proportion of the total mortgage balance - 2.49% of buy-to-let loans had arrears equivalent to more than 1.5% of the mortgage, down from 2.85% in Q4.
Nevertheless, buy-to-let repossessions totalled 1,700 in Q1, which represents 0.15% of all buy-to-let mortgages. This compares with 1,300 in Q4 (0.11%) and 900 (0.08%) in Q1 2008.
Michael Coogan, director general of the CML, says: "It is not surprising that buy-to-let lending continued to fall in the first quarter. Many buy-to-let lenders relied on wholesale markets rather than retail savings to fund their lending. Some have therefore had no access to the measures to support capital and new lending that have been available to deposit-takers.
"This, along with general housing market weakness, has influenced the decline in buy-to-let lending."
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