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Will Funding for Lending halt buy-to-let market growth?

by: Roger Knight
  • 08/01/2013
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Will Funding for Lending halt buy-to-let market growth?
There have been many reports in the last few months about how the buy-to-let (BTL) market is holding the entire mortgage market afloat.

The Council of Mortgage Lenders reported that for the first three-quarters of 2012 BTL lending was 19% higher than the same period in 2011, and it looks set to continue to grow this year.

Once again the housing market as a whole seems set to remain flat for yet another year and savings interest rates are visibly beginning to decline, so it seems people are turning to the rental sector either for investment or to fulfill their housing needs.

Investors have seen little return on their savings over the past few years and appear to be choosing to invest it in property.

And what better time? The issues facing first-time buyers have been well publicised and we’ve recently seen them fading into the background.

Some in the industry are predicting private rented households to rise by a further 1.1m over the next five years, which looks to be a fair prediction as the private rented sector is the only growing housing tenure to increase by 93% since 2001.

BTL mortgages are not only popular with customers, but us lenders are pretty fond of them too. Our experience is a success story, with only two BTL cases going into arrears since 2008. In fact, BTL makes up 15% of our lending and which is very reflective of the market as a whole.

But now that Funding for Lending has come along, does it pose a threat to the BTL market? If more products become available for FTBs, why would they rent?

Time will tell if the high demand for rental properties will still be around at the end of the year.

Roger Knight is lending manager at Newbury Building Society

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