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Buy-to-let Q4 lending reaches highest point since 2007

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  • 08/03/2016
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Buy-to-let Q4 lending reaches highest point since 2007
Buy-to-let lending in quarter four last year reached its highest level since 2007 as lenders advanced £10bn of landlord mortgages compared to £7.7bn in Q4 2014.

Statistics gathered from quarterly information submitted by around 300 mortgage lenders showed that the proportion of buy-to-let lending had increased from 15.6% in Q3 to 15.9% in Q4 2015 and by 1% year-on-year.

Balances outstanding on landlord mortgages in the final quarter of 2015 climbed to £178.2bn, representing 15% of total residential balances and the highest proportion since the series began in 2007.

The quarterly submission, Mortgage Lenders & Administrators Return (MLAR), is completed by regulated lenders, which include banks, building societies, credit unions and other specialist lenders, to cover all aspects of regulated and unregulated mortgage transactions.

The proportion of lending for overall house purchases, which includes buy-to-let and first-time buyers, was 69% in Q4 2015, around 0.8% lower than the previous quarter. In value, gross advances were up 20% year-on-year at £43.7bn.

First-time buyer purchases increased in the quarter by 0.5% to 21%. The value of residential loans advanced to fledgling buyers increased by £2bn from Q4 2014 to £13.2bn in Q4 2015.

By comparison, remortgage lending edged up by 1% accounting for 25% of total mortgage transactions in Q4 2015.

Products

Overall product interest rates fell to their lowest level in Q4 since the series began in 2007.

In the final quarter of 2015, the average interest rate fell by five basis points to 2.71%. This was driven down by an average decrease in fixed rates of seven basis points to 2.72% and partially offset by an increase in variable rates of three basis points to 2.63%.

Fixed-rate products continued to be the dominant product type, increasing slightly in popularity and accounting for 84% of all product types issued, up from 81% in quarter three and 82% in Q4 2014.

Affordability

The data revealed that borrower affordability remained stable in Q4 2015. Sole borrowers taking out mortgages with an income multiple of more than four times their income increased by 0.5% to 10.2% of total loans.

Joint applicants borrowing more than three times their income increased by just less than 1% over the quarter to reach 30% of all mortgage transactions. Gross mortgage lending at loan-to-values (LTV) of more than 90% fell back by 0.1% over the quarter to 3.2%.

The proportion of gross advances that were a combination of an LTV over 90% and loan-to-income multiple of over 3.5 x for single income borrowers (or 2.75 x for joint income borrowers) remained unchanged over the quarter at 2.3%.

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