Landlords were granted nearly as many mortgages as first-time buyers in January, according to figures from the Council of Mortgage Lenders, which will fuel fresh controversy over the growth of buy-to-let and falls in home ownership among younger people.
Loans for first-time buyers tumbled in January, falling 27% from December to just 19,000, worth a total of £2.8bn. But loans awarded to landlords jumped by 6% in the same month to 18,200, valued at £2.5bn. However, many of the loans advanced for buy-to-let will be for remortgaging as well as new purchases.
The CML said loans to home movers also declined in January, falling 24% to 22,400 compared to the previous month.
Paul Smee, director general of the CML, said: “Affordability constraints remain a factor for would-be borrowers, but we are still projecting lending to pick up over the next few months.”
Cheaper mortgage rates on interest-only buy-to-let loans are helping to finance a buying spree by landlords, according to Platinum Property Partners, which has investments in 85 towns in Britain.
“Buy-to-let was the fastest growing area of the mortgage market last year, and interest in the sector is holding strong in 2015. Our research shows that two in five current landlords plan to expand their property portfolio this year, and new pension freedoms are likely to increase the number of retirees using buy-to-let as part of their retirement planning.”
A new generation of “granlords” are poised to elbow aside first-time buyers, according to property website Rightmove. These are the 55-plus investors who may be considering using their pension pots to buy property.
New rules from 6 April will allow retirees to access their pension funds as they wish, and some of this money is expected to flow into buy-to-let investments. Estate agents are already reporting interest from people eyeing up a potential buy-to-let.
But others say the lull in lending to first-time buyers is down to pre-election jitters.
Richard Sexton, director of e.surv chartered surveyors, said: “The looming general election appears to be casting a shadow over the housing market. This is not down to supply. Conditions for home-movers are actually very positive, with record low mortgage rates on offer, a recovering jobs market, and more lending to borrowers with smaller deposits.
“In fact, February saw the largest proportion of high LTV borrowers in the market in five months, meaning financial support for first-time buyers is getting far better. But this willingness to lend by banks hasn’t been matched by consumers’ willingness to borrow.”
