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Banks offering more buy to let lending

[ Posted March 16th, 2012 ]

Nationwide and Lloyds Banking Group confirmed that most of their net lending is being released to landlords and not to homeowners.  As landlords continue to take advantage of buy to let mortgage rates they are flooding the mortgage market accounting for a large amount of borrowing.  At the same time, homeowners are choosing to sit on their current debts and remain uncommitted within the housing market.  As the lending continues to go to landlords over homeowners the market will become much tighter making it much harder for young first time home buyers to actually get onto the market.

A look at the ‘net lending’ figures which refers to what comes into and then leaves the mortgage system, reveals that at the close of 2011 net landlord borrowing had quickly overtook homeowner lending.  The last time that this occurred was during a brief period in 2010, but this time based on market analysis it is expected that lending will continue to favor landlords.  Prior to the financial crisis general lending and landlord lending tended to be equal, but now that the low mortgage rates and financial stability of the economy are gone, it seems that landlords will dominate the market.

Figures that were compiled using information from the Bank of England and the Council of Mortgage Lenders showed that homeowners are receiving £1 for every £1.11 that landlords receive.  Lenders such as Nationwide state that landlords are simply offering the highest amount of demand for their mortgage deals, and as a result they cater to this group by offering their best mortgage rates. Private buyers on the other hand often do not have the credit or the deposits required to purchase a mortgage therefore reducing their lending figures.

January figures show that net lending in the UK for all building societies totaled up to just £1m which is about seven mortgages total.  This new data has prompted market experts to ask the Government to help increase the tax burden on landlords and instead do something that will help younger people get into the first time home buying market.  The current age of first time buyers that do not receive help from their parents is now sitting close to forty; which is a large jump from the average of 28 in 2005.  4 out of 5 home owners that are under the age of thirty must ask for aid from their parents in order to purchase a home.

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