2018 Buy to Let Lending Will Drop Far Short of Forecasts
The buy-to-let market has been hit by many changes in the past few years. Changing taxes, regulations, and other alterations have all hit the BTL market, just as they were designed to do.
It is perhaps not surprising then to learn that UK Finance’s original forecast for buy-to-let mortgage lending for the year looks set to be proven incorrect. While forecasting is always a tricky business, the original figure of £12 billion of lending in this part of the mortgage market is likely to be out by some margin. Darren Pescod, CEO of The Mortgage Broker Ltd, thinks lending will be much lower and closer to £9 billion – a drop of 25% from the original figure.
While other areas of the mortgage market are looking healthier, few would be surprised at the drop seen in lending to landlords. Remortaging in this sector has experienced a positive bounce though, tempering the bad news somewhat. The original 2018 remortgaging forecast from UK Finance sat at £24 billion. This now looks set to go higher, potentially reaching some £27 billion by the end of the year.
No longer represents a profit-making business opportunity
It clearly illustrates the issues facing landlords at present. Many have taken the time to reassess their finances, their businesses, and the number of properties they are managing. For some, the buy-to-let market no longer represents a profit-making business opportunity. We’ve seen some leave altogether rather than looking to buy more properties for rental purposes.
For others, jettisoning some of their properties has been the best way to manage their financial situation. It is also easy to see why remortgaging is a good idea in some instances. By reassessing their financial situation, many landlords have been able to remain in the marketplace.
Drop in the amount loaned to landlords
But perhaps the most intriguing question is where BTL lending will end up in 2019. Darren Pescod says “This year will see a drop in the amount loaned to landlords. I expect to see a smaller drop next year and then expect the market to stabilise, however only time will tell. What is clear is that we should take any predictions with a pinch of salt.”
Source; AFS – Andrew Swain – CeMAP – OSCAR
Date; 13th of November 2018