Mortgage lending leaps as buy-to-let investors rush to buy

Patricia Madej
New rules on buy-to-let investments could push up lending early next year (Source: Getty)

November’s mortgage lending figures rose 23 per cent on last year, showing signs of a stabilising recovery in the housing market, figures published this morning showed.

The Council of Mortgage Lenders' (CML) November report showed gross mortgage lending rose to £19.9bn last month, nine per cent lower than October, but up on last November's £16.1bn.

Mohammad Jamei, CML economist, said: “Lending is set to finish the year stronger than it started, with the pace of lending recovering over the summer months.

"As we’ve said for the best part of 2015, lending continues to be supported by strong fundamentals, which are low inflation, strong wage growth, an improving labour market and competitive mortgage deal.”

However, analysts are predicting that an anticipated interest rate hike in early 2016 will have an costly effect on the housing market.

Jonathan Harris, director of Anderson Harris, said: “This will focus the minds of those who may have been delaying remortgaging and we expect more people to opt for a fixed rate in the first half of the year.”

And chancellor George Osborne’s plan to raise stamp duty on buy-to-let homes by three per cent in April next year will have buy-to-let investors rushing to buy earlier in the year.

Jeremy Leaf, former chairman of the Royal Institute of Chartered Surveyors, said: “While the [Bank of England] governor was right to be concerned about the runaway buy-to-let market, he has taken action and we now need to give the market time to settle before further intervention.”

Because of affordability pressure and new supply changes, the CML predicts limited upside potential for housing sales until 2017.

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