The first half of 2005 saw lenders advance around £9.9bn in new buy-to-let mortgages, showing a marginal increase on lending for second half of 2004, according to new data from the Council of Mortgage Lenders.
But the CML says the number of new loans declined by 4% in the first half of this year to 94,000, although this is a more modest reduction than the 18% fall in the second half of 2004.
The total size of the buy-to-let sector continued to expand in the first half of 2005, and is now worth £63.5bn. There are currently 632,000 buy-to-let mortgages, representing 7% of all outstanding residential mortgage lending.
The number of buy-to-let mortgages three months or more in arrears increased in the first half of this year to 0.70% from 0.66% in the second half of last year. This is less than the percentage increase in arrears levels being witnessed in the entire mortgage market, says the CML, and the figure remains low in comparison to the 0.87% arrears rate in the market as a whole.
Moreover the average maximum lenders will agree to lend has remained unchanged for almost five years at 80% of the value of the property.
Andrew Heywood, senior policy adviser at the CML, says the figures reveal a continuing trend toward a soft landing for the housing market overall and that is is no surprise the buy-to-let market has followed suit.
"Our half-yearly figures suggest the market is in robust shape, and the recent cut in interest rates by the Bank of England will serve to buoy up the sector in the coming months. However, lenders will not be complacent, and will keep a close eye on lending to ensure it is responsible and sustainable," she adds.
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