Buy-to-let mortgage demand rising, says BoE
Increased investment in buy-to-let properties has led to a surge in demand for mortgages, the Bank of England (BoE) has said.
According to the bank's latest Credit Conditions Survey, there has been a substantial uptake in buy-to-let mortgages in recent months.
Demand has been rising since the second quarter 2010, said the BoE report, but increased rapidly in the second quarter of 2011.
It suggests that this could be down to increased investment in buy-to-let properties as landlords seek to take advantage of rising rental yields brought on by a spike in tenant demand.
"In recent discussions, some major UK lenders noted that growing rental demand from tenants was driving a tickup in demand for BTL mortgages. This was consistent with the view from contacts of the Bank's network of agents, who have reported that activity in the rental market is attracting BTL investors," said the BoE.
The driving force behind this could be the difficulty would-be first-time home buyers are having in securing a mortgage, causing them to turn to renting instead.
"Some major UK lenders attributed the rise in tenant demand to the effect of discouraged first-time buyers turning to the private rental market," said the report.
In contrast, the availability of buy-to-let mortgage lending has improved significantly over the past year, said the Bank.
A recent Moneyfacts Group study found that the number of buy-to-let products currently on the market has risen to over 600, the highest number since September 2008.
"In recent discussions, the major UK lenders reported that new and returning entrants to the BTL mortgage market had increased availability, albeit from a low base, and some reported that lending criteria, which had tightened sharply during the crisis, had started to ease," commented the Bank.
Meanwhile, the Council of Mortgage Lenders reported this week that gross mortgage lending in the owner-occupier sector fell by three per cent year-on-year in June.
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