Mortgage & Housing Round Up: The buy to let bandwagon and positive signs for first time buyers


Housing & mortgage round up_istockphotoIt’s been a busy week for the Council of Mortgage Lenders who has reported a large rise in the popularity of buy to let investing, whilst other data points to an improving housing market, especially for first time buyers.

More people join the buy to let bandwagon

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Falling property prices, low interest rates and rising rents have combined to cause a steep rise in the popularity of buy to let investments.

Figures from the Council of Mortgage Lenders (CML) show that there are now nearly 1.5 million buy to let investors in the UK. With 2012 seeing a large increase in the number of buy to let mortgages being taken out, with this type of lending accounting for 11.5% of all mortgage loans in 2012 up from 9.8% in 2011.

The total lent to buy to let investors in 2012 was just over £16 billion, a 19% increase on the previous year and the highest level for four years, when the full effects of the housing slump and financial crisis were being felt.

The figures only include those people who have taken out a mortgage to purchase their buy to let property, and do not take account of cash purchases, which may also have increased as people seek out better returns following falls in interest rates on savings accounts.

In fact, the fall in interest rates, as a result of the Bank of England’s policies and the government’s Funding for Lending Scheme, has given the buy to let market a double boost. Whilst interest rates on savings accounts have fallen, making then unattractive to many savers, buy to let mortgages have become cheaper, tempting many people to invest in property instead of keeping the money in the bank.

Commenting on the figures Paul Smee, Director General of the CML, said: “Buy-to-let is benefiting from strong tenant demand, which is likely to continue.”

Smee continued: “Landlords who can demonstrate a strong track record are in a good position to expand their portfolios.”

15_02_2013 Properties in arreasNumber of repossessions each year

Source: Council of Mortgage Lenders

Repossessions down to lowest level for five years

Further evidence has emerged that the worst may be over in the housing market.

Figures, again from the Council of Mortgage Lenders (CML), have shown the number of repossessions has fallen to the lowest level since 2007.

According to the CML there were 33,900 repossessions in 2012, down from 37,300 in 2011, with the lower interest rate environment, the increasingly stable job market and the forbearance shown by many mortgage lenders all contributing to the decrease.

Unsurprisingly the total number of households with mortgage arrears also fell; with 157,900 of the 11.4 million mortgages in the UK in arrears at the end of 2012, down from 216,400 at the height of the housing crisis.

Paul Smee, again: “The fall in arrears and possessions is obviously very welcome. Households fall into difficulty for a variety of reasons, most of which cannot be anticipated. Wherever possible, lenders will work with borrowers to manage periods of temporary financial difficulty and enable them to keep their home. Anyone worried about their situation should talk to their lender, who will try to help them.”

Is the tide turning for first time buyers?

It’s been a busy week for the CML, after reporting figures on the buy to let market and the rate of repossessions, they have turned their attention to first time buyers and released some good news for this beleaguered group of would-be homeowners.

Figures from the CML show that 2012 was the best year for homes being purchased by first time buyers since the financial crisis. Last year 216,000 first time buyers bought a home, the highest level since 2007 and a rise of 12% on 2011.

The CML has also reported a “modest but discernible” increase in the number of loans made to buyers with smaller deposits with 20% of borrowers putting down a deposit of 10% or less.

There are various factors behind the rise in the number of first time buyers. Firstly the economy is recovering slowly and the rate of unemployment is falling, secondly house prices have fallen to more affordable levels, and finally the government’s Funding for Lending Scheme (FLS) has pushed down interest rates and seems to be starting to make mortgages more accessible.

Cost of renting falls

The cost of renting a home has fallen for the third month in a row, giving a little relief to many, particularly people trying to save a deposit to help them buy their first home.

According to LSL Property Services the average rent fell by 0.3% in December, although it is still 2.8% higher than this time last year.

The average rent in England and Wales now stands at £732 per month.

David Newnes, Director of LSL said: “An improving mortgage market in January helped take a little pressure off the limited supply of rental property, at a time when the demand from tenants on the move is far from its seasonal peaks.”
“But the dip in competition is not likely to last long.”

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email

Your home may be repossessed if you do not keep up repayments on your mortgage.

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