Buy - To - Let Market Still Thriving

Good news from the Council of Mortgage Lenders (CML). apparently the buy-to-let property market is still prospering. Latest figures show that the number of buy-to-let loans rose by 23% last year, taking their number to 1,038,000 and accounting for 10.3% of all outstanding mortgages.

Michael Coogan, the CML's director genera said demand from landlords had been resilient, despite problems at some lenders like Northern Rock."Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high-quality homes to rent....Many buy-to-let loans have interest rates linked to interbank rates, so may have seen hefty increases in payments when Libor rose to abnormally high levels in the second half of 2007....These are now likely to be returning to lower levels in line with the reduction in Libor rates since December last year,".

LIBOR is the primary benchmark used by banks, securities houses and investors to fix the cost of borrowing in the money, derivatives and capital markets around the world.

Despite the widespread perception that lending to landlords is a high-risk business, the figures show that these customers have lower levels of arrears and repossessions than home buyers generally. The number of buy-to-let loans that were more than three months in arrears went up from 0.58% to 0.73% during 2007, but that was still a lower level of arrears than the 1.1% seen among all mortgage borrowers.The repossession rate was just 0.1%, compared with the 0.23% rate seen for the whole market.