The Council of Mortgage Lenders (CML), the body responsible for representing lenders and promoting sustainable housing finance in the UK, has released its latest data on lending over 2013. The CML is one of the most reliable providers of such data and it’s good to see that their research confirms the current strength of the private rented sector. Buy-to-let (BTL) lending finished strongly in the last quarter of 2013, up 20% compared to the last quarter of 2012. In addition, buy-to-let loans for house purchase increased 18.6% in 2013 compared to 2012. Importantly, first time buyer lending was also up 37% over 2013, showing that the rise of BTL is not occurring at the expense of these buyers, but alongside them.
Paul Smee, the director general of CML, has also suggested ‘relative optimism’ for the future. He cites the Mortgage Market Review (MMR) in April and murmurs of a housing bubble as the two principal challenges facing the sector this year. In fact, MMR could boost BTL further as it will be less regulated than other types of mortgage and so more attractive to lenders trying to achieve their targets. The surge in new mortgage deals may already be pre-empting this. While the government should always be wary of a housing bubble forming, whereby house prices quickly rise to unsustainable levels and collapse, we seem very far from such conditions at the moment. Both growth and sales are below their pre-crisis peaks and the Institute for Fiscal Studies has said there is no evidence for claims of a bubble. Demand is high and the UK is extremely attractive to foreign investors, while supply remains low. The social implications are open for debate, but the economic indicators suggest this growth is entirely sustainable.