Buy-to-let confounds gloomy predictions

The buy-to-let sector continues to flourish, despite warnings from property experts that the market may have peaked.

The Council of Mortgage Lenders (CML) has released figures showing that mortgage borrowing categorised as “other lending” increased by 40% in August.

During the month £7.8 billion was borrowed under the “other lending” heading which includes buy-to-let mortgages.

In terms of total lending, “other lending” made up just under a quarter of the £34 billion borrowed during August.

According to the CML, the buy-to-let sector continues to be “underpinned by house price increases, tenant demand, rent increases and landlords’ willingness to take long-term investment decisions”.

Growth in the buy-to-let market in 2007 has confounded property analysts who have predicted that confidence in the sector would be undermined, causing a downturn in the market.

Forecast of a downturn in the property market overall have been appearing since the beginning of 2007 and have been fuelled by this summer’s crisis in the money markets and the fate of Northern Rock.

Only last week Capital Economics, the independent economic analyst, reported that house prices could fall by thousands in the next few years.

Whilst buy-to-let borrowing increased during August, the number of people securing loans for a house purchase or remortgage decreased by 11% and 12% respectively.

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