Some 48,862 new buy-to-let loans were issued in the third quarter of 2024, worth £8.6bn, up 6.5% year-on-year, according to the latest data from UK Finance.
The value of buy-to-let loans issued also increased – 8.9% – compared with the corresponding period a year earlier, while average gross buy-to-let rental yield in Q3 2024 was 6.93%, compared with 6.53% in Q3 2023.
During this period, the average interest rate across all new buy-to-let loans was 5.22%. This was 0.03% higher than in the previous quarter, but 0.09% lower than in the same quarter of 2023.
Reflecting the movements in interest rates, the average buy-to-let interest cover ratio (ICR) for the UK in Q3 2024 was 195%, up from 190% in Q1 2024.
In addition, the number of buy-to-let fixed rate mortgages outstanding in Q3 2024 was 1.4 million, 3.3% YoY.
In contrast, the number of variable rate loans outstanding dropped by 14.9% to 541,488.
As far as arrears are concerned, UK Finance said there were 13,000 BTL mortgages in arrears greater than 2.5% of the outstanding balance. This is a drop of 570 from the prior quarter but is 19% higher than last year.
The report also found that there were 710 BTL mortgage possessions in Q3 2024, which is unchanged from the previous quarter but up by around 73% on the same period last year. This is unchanged from the previous quarter, but an increase of 73.2% on the same quarter in 2023.
Melanie Spencer, sales and growth lead at Target, said: “Given the challenges surrounding the buy-to-let market, it’s encouraging to see a year-on-year increase in lending in Q3. Of course, the data captures the market prior to the Budget and the changes to stamp duty on additional properties.
“However, the market has been resilient and landlords have remained agile, capitalising on a challenging residential market and exploring opportunities further afield to expand their portfolios. There will always be those that will choose to sit back and not expand due to market conditions or policy changes, but conversely there are those still making the most of the opportunities in the market. After all, demand for good rentals remains high as does rents and the yields available to landlords.
“BTL lenders have continued to innovate too and make movements on rates where possible to help support those landlords either looking to expand or refinance. Timing has always been a critical part of the buy-to-let process, especially now as the demands on landlords increase. To best support brokers and their landlord clients, lenders need to be investing in the latest technology to drive efficiencies in application, decision-making and throughout the entire process to help facilitate transactions.”
Richard Pike, chief of sales and marketing at Phoebus Software, added: “While Q3 figures aren’t as strong as Q2, which saw a surge of 26% in buy-to-let business compared to Q3’s 6.5% rise, this still shows a strong, confident buy-to-let market.”
Read the orginal article: https://propertyindustryeye.com/buy-to-let-lending-grows-by-6-5-in-q3-2024/
