BTL lending now at a record high

Graham_Devon

.... as concerns grow that the Bank of England's credit easing scheme is lining landlords pockets.

By the end of March, buy-to-let lending accounted for a record 13.4pc of the total £1.2 trillion of mortgages in the UK – up from 13pc in the final three months of last year, according to the Council for Mortgage Lenders (CML).

Banks and building societies loaned landlords £4.2bn in the quarter to March, 13pc more than last year and 12.4pc of all lending for the period, taking the total stock of buy-to-let mortgages in the UK to £166bn.

The buy-to-let industry is enjoying a renaissance after new lending effectively dried up in the financial crisis. Landlords bought 17,730 new homes in the latest quarter at a cost of £1.9bn – the strongest performance for the period since the dying days of the boom in 2008.

All great....but...

However, economists have questioned the wisdom of using the state-subsidised Funding for Lending scheme (FLS) to prop up the landlord sector. Danny Gabay, a director of Fathom Consulting who has described FLS as “funding for letting”, said: “FLS makes sense if you are a buy-to-let investor. The buy-to-let sector is growing at the expense of first time buyers.”

Angus Hanton, co-founder of the Intergenerational Foundation think-tank, has warned that “rather than helping younger homebuyers, [FLS] will serve principally to increase lending to buy-to-letters, increase prices and undermine Mr Cameron’s grand plan for a property-owning democracy”.

We know which side of the fence pretty much every poster on this board will sit on from the start!


BUT....since the funding for lending scheme started, BTL landlords have "enjoyed" a larger drop in lending rates and also a larger increase in the amount they are able to borrow compared to the homebuyers they compete with.



Bear in mind that they can still borrow on interest only loans and they are much favoured when it comes to borrowing than your humble home buyer. Concerns are mounting at the "fairness" of such a lending landscape.

As one mortgage company director stated....it's all encouraging new landlords into BTL, however, for FTB's it really was as miserable as it could get.


http://www.telegraph.co.uk/finance/economics/10046428/One-in-eight-pounds-lent-to-landlords.html

Thrugelmir

Graham_Devon wrote: »

We know which side of the fence pretty much every poster on this board will sit on from the start!

Don't have any issue with this. BTL borrowers are less risky than FTB's given the now much tighter lending criteria. Minimum salary, 20% deposit, existing home owner etc. . The article totally omits that the majority of BTL mortgages also carry hefty product fees. So the headline rates aren't as attractive as they appear as on a straight rate comparison.

Everybody is chasing yield at the moment. Stock market may well rise higher as well. Although underlying growth isn't there. With low interest rates here to stay a while longer. Making a return even on cash is getting harder and harder.

System

Less risky lending, yay!

wotsthat

Graham_Devon wrote: »

Bear in mind that they can still borrow on interest only loans and they are much favoured when it comes to borrowing than your humble home buyer. Concerns are mounting at the "fairness" of such a lending landscape.

BTL's are lower risk than the humble home buyer and if it goes t*ts up lenders don't have to bother with all that forbearance stuff.

You wanted lower risk lending - that's what you got.

HAMISH_MCTAVISH

Thrugelmir wrote: »

BTL borrowers are less risky than FTB's

Joeskeppi wrote: »

Less risky lending, yay!

wotsthat wrote: »

BTL's are lower risk than the humble home buyer and if it goes t*ts up lenders don't have to bother with all that forbearance stuff.

You wanted lower risk lending - that's what you got.

I can see this is going to be yet another thread Graham wishes he hadn't started.

robmatic

Personally I think it's appalling that FLS is providing an effective mechanism for cheap funding to enter the broader economy. There's a danger that people will be able to pay down their accumulated debts or be encouraged to make capital investments, which should obviously be discouraged.

Graham_Devon

wotsthat wrote: »

BTL's are lower risk than the humble home buyer and if it goes t*ts up lenders don't have to bother with all that forbearance stuff.

You wanted lower risk lending - that's what you got.

No. What i got was a large tax bill and the taxpayer put at risk.

Have you ignored what the article states....that it's funding for lending (our cash effectively...or should I say our grandkids cash) fueling this?

wotsthat

Graham_Devon wrote: »

No. What i got was a large tax bill and the taxpayer put at risk.

Have you ignored what the article states....that it's funding for lending (our cash effectively...or should I say our grandkids cash) fueling this?

All I see is you ramping BTL by pointing out it's the road to easy riches apparently at taxpayer expense.

Thrugelmir

robmatic wrote: »

Personally I think it's appalling that FLS is providing an effective mechanism for cheap funding to enter the broader economy. There's a danger that people will be able to pay down their accumulated debts or be encouraged to make capital investments, which should obviously be discouraged.

The only winners will be the banks. As cheap funding is guaranteeing them profits to rebuild their balance sheets. Question is when's the time to buy the shares?

Graham_Devon

wotsthat wrote: »

All I see is you ramping BTL by pointing out it's the road to easy riches apparently at taxpayer expense.

Rose tints letting you down yet again then.