Sometimes it’s the littlest of things that can tell you how a market or sector is progressing. Here is one of those. Earlier this year, for the first time, the Council of Mortgage Lenders (CML) began publishing monthly data about the level of buy-to-let lending, the number of buy-to-let loans, and the split between both purchase and remortgage. So what, you might ask.
Well, the question you really need to ask yourself is why the CML hadn’t ever done this before? Even in those pre-Credit Crunch days when the buy-to-let market was certainly bigger than it is today, the CML never felt the need to offer a monthly view of the sector. We would all have to wait for quarterly statistics to be able to gauge how things were progressing.
So, why now? Well I can only assume there are a number of reasons for the move to monthly data. Firstly, the level of interest in buy-to-let has grown considerably and with some predictions that lending levels could rise by 25% next year, that interest is only going to grow. Secondly, the overall importance of buy-to-let to the wider mortgage market, the housing sector and the economy has also increased – the Coalition Government have certainly recognised this and there has been an acknowledgement that without a strong private rental sector the housing problems we face in the UK can only get worse.
In a sense the decision to report monthly is something of a vote of confidence in the sector – it is acknowledging to a large extent that buy-to-let information is just as important and interesting as the wider market data on first-time buyers, owner-occupiers, remortgagors, etc. It suggests that buy-to-let can no longer be treated as a ‘niche’ area, instead it is right at the heart of the mortgage market and will be an increasingly important part of it.
Part of the reason for all this of course is the fact that the buy-to-let sector continues to grow and the latest monthly figures from the CML prove this. £2.1 billion of buy-to-let loans were advanced in October – a sizeable increase of 10.5% from the previous month. The number of loans was 16,200 – an 11% increase on September with a very even split between purchase (8,500) and remortgage (7,600). It goes someway to showing that it is not just one area that is supporting the market and landlord borrowers clearly feel there are now products and rates available that make both purchasing new property and remortgaging worthwhile.
Without having seen the figures for the last two months of 2013 I anticipate a potential increase for November – up from October – with a traditional drop-off in December due to the short month, etc. That said, I think it will be fairly obvious to all that 2013 is going to work out as a much improved year for buy-to-let lending than 2012 and all the pointers suggest an ongoing improvement into 2014.
All good news, particularly for mortgage brokers and their clients given that I expect lenders’ appetite to lend in the buy-to-let sector to grow, plus we are undoubtedly going to see a number of new (and returning) lenders back operating in the sector. Product competition will rise, and as long as we’re able to ensure this is matched by a continued focus on responsible lending, then buy-to-let will continue to thrive and offer opportunities for all stakeholders.
Bob Young is managing director of CHL Mortgages
