At the end of the year there were an estimated 1.3 million buy to let mortgages outstanding, worth £152 billion, accounting for 12% of the total value of mortgages outstanding.
The total value of buy to let lending in 2010 was £10.4 billion, 22% higher than in 2009, and the total number of loans advanced in the year was 102,000, 10% higher than the previous year.
In the fourth quarter of 2010 there were 28,600 new buy to let loans advanced, worth £3 billion. This was a rise of 6% by volume and 7% by value from the third quarter.
Looking ahead to the prospects for the buy to let sector in 2011, the CML expects strong rental demand to remain, driven not least by the continuing deposit constraints to entry to the owner occupier market.
‘Funding remains a key constraint on growth in buy to let lending but demand seems to be resilient and loan performance has improved. Looking ahead, loan performance could potentially be adversely affected by rising rent arrears or interest rate rises, but at present there is no indication of these pressures materialising in practice,’ said CML director general Michael Coogan.
‘There is also a strong counterbalancing growth influence on the buy to let market, as tenant demand seems set to remain high in the face of continuing deposit constraints to entering the owner-occupier market,’ he added.
The CML data also shows that there was a 24% fall in repossessions and 13% fall in mortgage arrears in 2010. At 36,300, the number of repossessions by first charge mortgage lenders in 2010 accounted for just 0.3% of all mortgages, 24% lower than in 2009.
While the number of mortgages ending 2010 with arrears of 2.5% or more of the outstanding balance also fell by 13% on the previous year end, standing at 169,600, 1.49% of all loans.
During the fourth quarter the number of repossessions was 7,900, down 11% from 8,900 in the third quarter, and down 26% on the 10,700 in the same period a year ago. This was the fifth consecutive quarterly decline in repossessions.
On arrears, the 1.49% of mortgages with 2.5% or more of arrears at the end of the fourth quarter was the lowest share since the third quarter of 2008 at 1.29%. It compared with 176,100 (1.55%) arrears cases at the end of September, and 196,000 (1.72%) at the end of 2009.
‘As we go through 2011, the number of people facing payment pressures may increase if interest rates rise, and as a result of the spending cuts that have resulted in reductions in the level of public support available,’ said Coogan.
‘We will be monitoring developments closely, but at present we continue to expect the number of arrears and repossessions to be in line with our forecasts of 40,000 repossessions and 180,000 arrears cases as at the end of 2011,’ he added.
