Buy-to-let borrowing pushes "modest" mortgage lending increase

Tuesday, 25 October 2011 03:34

Gross mortgage lending rose slightly in September as the buy-to-let sector continues to grow.

That is according to the latest report from the banking and financial services trade association BBA, which revealed new home loans totalled £8.4 billion last month, up 1.6 per cent compared with August and seven per cent higher than September 2010.

This increase is as a result of a slight upturn in the number of mortgage approvals in recent months, particularly for buy-to-let landlords, even though they dipped slightly in September.

However, the positive effect of this increase has been offset by high levels of capital repayment, meaning net lending climbed by just £0.8 billion.

Demand for unsecured credit remains weak, the study continued, with repayment of loans and overdrafts continuing to outweigh new lending.

BBA statistics director, David Dooks said: "Households are limiting their borrowing in the face of unemployment concerns and pressure on household finances amid general economic uncertainty.

"A modest stimulus to gross mortgage lending is coming from the buy-to-let sector as rental yields continue to improve," he added.

The Bank of England's latest Trends in Lending report also showed a rise in activity in the buy-to-let market as landlords try to cash in on rising rents.

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