Buy to let mortgage lending down

Buy to let mortgage lending fell again in the first quarter of 2009, making it the sixth consecutvie quarter that it has fallen.

According to the latest figures from the Council of Mortage Lenders (CML) there were 22,400 new buy to let mortgages in the first quarter, way down on the 72,400 in the first quarter of 2008.

CML director, Michael Coogan, said ‘It is not surprising that buy to let lending continued to fall in the first quarter. ‘

He explained ‘Many buy to let lenders relied on wholesale markets rather than retail savings to fund their lending. Some have therefore had no access to the measures to support capital and new lending that have been available to deposit-takers.’

He added ‘This, along with general housing market weakness, has influenced the decline in buy to let lending.’

The number of buy to let mortgages in arrears by 3 months or more rose in the last quarter. It now stands at 3.09%, compared to just 0.92% at the end of the first quarter 2008.

However, the CML advises that this mortgage arrears figure may be inflated as there has been a large reduction in many borrowers’ monthly mortgage payments – the same given sum of arrears represents a higher number of months payments when interest rates fall.

Nevertheless landlords need to be wary of rising tenant rental arrears which can lead to landlords getting themselves into mortgage arrears.

As tenants face more risk of redundancy the risk of rental arrears rises.

Landlords need to consider landlords insurance and rent guarantee insurance to protect themselves against non-payment of rent.

There are many providers who provide landlords insurance quotes online. This means you can easily and very quickly find and buy the cover that you need at a reasonable cost.