Buy to let lending surges by more than 50%

Buy to let borrowing soared by more than 50% in the last three months of 2013, compared with the same time a year earlier.

Banks and building societies advanced £6.6 billion to landlords and property investors – £2.3 billion more than the same period in 2012.

The increase in lending was 53% year-on-year, according to the latest lending figures from the Bank of England and the Financial Conduct Authority.

The report gives an overview of all mortgage lending in Britain for 2013.

Gross mortgage lending was £51.5 billion in the quarter, which was the highest amount advanced since the third quarter of 2008 and almost a third up on the comparative period in the previous year.

The total value of outstanding loans against homes at the end of the year was £1,238 billion, a slight increase of 0.4% year-on-year.

First time buyers borrowed £3.1 billion more in 2013, taking total lending to them to £10.6 billion for 2013, thanks mainly to the highest quarterly increase in advances since the third quarter of 2007.

Borrowing at more than 90% loan-to-value made up just over 2% of all residential lending, more or less the same amount as the year before.

Fixed rate mortgages were the favourite product with borrowers, with gross advances rising for the fifth consecutive month and accounting for 80% of all homeowner loans.

Other good news for borrowers was average interest rates were down 0.7% to 3.25%, the lowest figure recorded since 2007.

During the year, fixed rate mortgage deals averaged an interest rate of 3.30%, while variable rate loans hovered around the 2.99% mark.

During the whole year, the Bank of England maintained the official interest rate at 0.5%.

Cheaper mortgages led to fewer arrears cases. Lenders reported 29,208 new cases, a fall of 2.9% on the previous quarter and the lowest number since 2007.

Article courtesy of LandlordZone

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