The number of landlords in serious arrears on mortgages rose by more than 25 per cent in the final quarter of 2007, as interest-rate rises and tightening in the credit markets began to take a toll on the buy-to-let sector.
According to the Council of Mortgage Lenders, the number of landlords in arrears by more than three months rose to almost 7,600 in the last three months of last year, up from about 6,050 in the previous quarter. Year on year, the number of landlords in arrears was up 54 per cent.
Although sales of buy-to-let mortgages also slowed quarter on quarter, down more than 10 per cent on the previous three months, sales were up almost 11 per cent year on year.
The CML said rental demand remained strong, adding that levels of arrears were still well below the mainstream owner-occupier mortgage market. "Tenant demand remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high-quality homes to rent," Michael Coogan, head of CML, said. "Buy-to-let has remained resilient in the face of funding constraints. Many buy-to-let loans have interest rates linked to interbank rates, so may have seen hefty increases in payments when Libor rose to abnormally high levels in the second half of 2007. These are now likely to be returning to lower levels."