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Buy to let lending soars by 65%, says Bank of England

17 June 2014

Buy to let lending is booming, according to the latest figures from banks and building societies.Buy to let lending is booming, according to the latest figures from banks and building societies.

The Bank of England has released new figures showing that lending was up two-thirds in the first three months of 2014, compared to the same time last year.

Landlords borrowed £6.5 billion in the first quarter of 2014 – up £2.4 billion from the £4.1 billion advanced in the first quarter of 2013.

The research shows buy to let lending was 14% of all mortgages in the period – a 2% rise on last year.

In a few weeks, trade body the Council of Mortgage Lenders is expected to release statistics echoing the Bank’s figures.

Industry experts expect the lending figures to show that banks and building societies are piling money into the buy to let sector as new lending rules tighten up the availability of loans to homebuyers.

The CML says the buy to let lending target for 2104 is £25 billion – a fifth higher than last year.

However, the figures are well adrift of buy to let lending at the peak of the housing bubble in 2007.

Just as the credit crisis hit and property prices collapsed around six years ago, buy to let lending was running at about £80 billion to £100 billion a year.

Bank of England governor Mark Carney has warned that he is concerned about overheating house prices as surveys report double-digit rises in property values of up to 11%.

He has told lenders and landlords to expect interest rates to rise later this year – almost a full year earlier than expected.

“I don’t believe house prices are out of control,” he said. “But we have the tools to take the heat out of the market to make sure prices do not run away again and lead to another bubble which would be a disaster for the economy.”

However, he has allayed fears of a large rise in official interest rates, which have been pegged at 0.5% for more than four years.

“Any increase will be gradual to make sure businesses and homeowners do not fall into debt problems,” he said.