Buy-to-let lending went up 28% last year to £15.6 billion, the highest figure since 2007, according to new figures from the Council of Mortgage Lenders.
First-time buyers borrowed £46.7 billion last year, up 4% on 2014. However, the number of loans to first-time buyers remained static at 311,700, suggesting the increase was a result of rising house prices rather than more people getting on the property ladder.
Home movers took out 365,800 loans last year, down 0.2%, but the amount borrowed totalled £72.1 billion, up 7% on 2014.
Paul Smee, director general of the CML, said: “Improving economic conditions, boosted by government schemes like Help to Buy, saw the highest quarterly number of loans to purchase a home for eight years. The market has seen a gradual upward trajectory over the past few years, rather than rapid growth, and we’d expect this trend to continue with gross lending steadily increasing over the next two years.”
The data also revealed that the number first-time buyers continue to outnumber buy-to-let purchases by three to one.
Lending to buy-to-let investors in 2015 totalled £37.9 billion, however, in 2015 only 41% of buy-to-let mortgages were for house purchase, a total value of £15.6 billion.
John Heron, managing director of Paragon Mortgages, said: “A common accusation levelled at buy-to-let landlords is that they have an unfair advantage over home-buyers. The data released today would suggest this is not the case, with buy-to-let purchases making up only 11.6% of all purchases. First-time buyers accounted for three times as many transactions as buy-to-let purchasers.
“Total lending for buy-to-let whilst up 28% by volume on 2014, remains lower than it was in 2006, with remortgages accounting for 58% of all lending. In 2015 lending for new purchases was only marginally higher than it was in 2003.
“The information from the CML also indicates strong credit quality in buy-to-let lending, with average loan to values moving lower, affordability strengthening and arrears at the lowest levels since before the financial crisis.
“Despite claims of over-heating, effectively the sector is still recovering from the financial crisis and if we could draw the attention of government and policy makers to any one argument this would be it.”
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By value, buy-to-let remortgage lending has surpassed its 2007 peak, according to the CML figures. First-time buyer lending, meanwhile, is very close to its pre-crisis peak, whilst buy-to-let purchase lending – despite having seen arguably steadier and stronger growth – is still picking up from an absolute low of £4.5 bn in 2009. Buy to let makes up a smaller proportion of purchase lending today than it did before the crash. In relative terms, it is still a recovering market.