Around 26,900 loans were advanced in Q3, a second consecutive quarterly increase in lending of 8% by volume and 12% by value, reported the Council of Mortgage Lenders (CML).
The volume of lending was up 14% and the value of buy-to-let loans was up 33% to 23,700, compared to the third quarter of 2009.
Michael Coogan, CML director general said: “We would expect buy-to-let demand to pick up further if current rising rental trends continue and house prices remain broadly stable. However, there is short term uncertainty as a result of the unresolved debate on housing benefit and landlords’ response to new limits.
“The bigger question is whether there will be sufficient supply side capacity to meet that demand, as the number of buy-to-let lenders dwindled in the credit crunch after 2007 and is yet to be fully restored.
He added: “However, it is clear that in a market where access to home-ownership has become more difficult, the private rental sector is experiencing, and will continue to benefit from, high levels of demand for good quality housing.”
Nigel Terrington, Paragon Group chief executive, said: “Tenant demand is extremely strong and the private rented sector needs to expand to cope with the increased numbers of people wanting to live in rented homes.”
“Therefore, the CML data is pleasing. Although we are still a long way from normal market conditions and lending is low by historical standards, the market is heading in the right direction and is growing again.”
At the end of September, there were £1.29m buy-to-let mortgages outstanding, an increase of 7% from the previous quarter.
The data revealed that the proportion of loans in arrears of more than 1.5%, remains broadly unchanged at 1.45%, while repossessions (at 0.12%) and the appointment of receivers of rent (at 0.10%) was also virtually unchanged from the previous quarter.
