Buy-to-Let mortgages hit record high

16 August 2006

New figures show that buy-to-let borrowing hit a record high in the first six months of the year. The Council of Mortgage Lenders said the number of buy-to-let mortgage approvals climbed 17% from the second half of 2005 – to 152,000.

There are currently 767,000 residential buy-to-let mortgages in the UK, totalling £83.9 billion. The Council of Mortgage Lenders says the residential buy-to-let mortgage market now makes up 8% of UK lending, compared with 7% in the first half of 2005.

The CML added that underwriting criteria hasn’t changed; the average mortgage stands at 85% and lenders require rental income to exceed mortgage repayments by at least 25%.

But the CML’s director general, Michael Coogan, said this month’s interest rates increase would affect on the buy-to-let market. He said: “The view that interest rates are now more firmly on an upward trend is likely to cause the rapid growth of buy-to-let investment to slow in the coming months. Fundamentally, however, the rental market remains sound and looks set to continue to offer good long-term prospects for astute investors.”