Buy to let mortgage lending falls for the 4th month

Landlord Expert
By Landlord Expert February 11, 2011 14:17

Loans approved during December 2010 showed a 6% decline compared to November.

According to Peter Charles, an economist at the CML, this is most likely due to the market expecting an increase in interest rates. Some lenders have in fact already started to increase the interest rates they charge on certain types of loans. This seems to have a negative effect on investor sentiment in the buy-to-let industry.

The CML says that there seems to be strong inflationary pressures in the economy and that this will most likely lead to an increase in interests rates sooner than anticipated by most industry players.

The latest market report published by the CML shows that they are expecting a significant drop in the economic growth rate of the UK during the first six months of 2011. This is the reason why they do not believe that the base rate rise by more than 1% during the next 12 months.

This will mean a moderate increase in the monthly repayments of buy-to-let owners with landlord insurance policies. The CML does therefore not believe this will cause major problems for most landlords and they subsequently do not predict a dramatic rise in arrears during the next year.

The fact that demand in the buy-to-let market is dropping right now might strangely enough present savvy investors with great investment opportunities. Lower demand means lower prices and lower prices mean lower loan repayments. The end result is better cash flow for the astute buy-to-let investor.

 

Landlord Expert
By Landlord Expert February 11, 2011 14:17

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