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Buy-to-let stimulus to gross mortgage lending in September

"There was a small net increase in business lending to the non-financial sector in September. Firms are continuing to build up cash reserves where possible, while concerns about the economy may be putting some investment intentions on hold.

“Households are limiting their borrowing in the face of unemployment concerns and pressure on household finances amid general economic uncertainty.

“A modest stimulus to gross mortgage lending is coming from the buy-to-let sector as rental yields continue to improve”.

Duncan Kreeger, chairman of West One Loans, said, “If you take inflation into account, the mortgage market is shrinking in real terms.  Embattled high street banks are looking to recoup equity.  They want to lend cautiously, to wealthier borrowers with higher deposits.  That’s not only affecting first time buyers, it’s also hitting potential buy to let lenders.  Bridging lenders are filling the mortgage void left by the retreat of high street lenders from the market.  While annual net lending has increased just 1.6% in the residential market, the West One Bridging Index shows net bridging lending has shot up 53% over the same period.  At the moment, bridging finance is the lifeboat many BTL borrowers in particular are turning to.  But if the economy nosedives over the winter, the market for borrowers with small deposits could enter a state of near paralysis.”

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