Lending to buy-to-let investors continued to slow during the first half of 2005 as house price growth stalled, figures showed yesterday.
The Council of Mortgage Lenders said a total of £9.9 billion was advanced to people through buy-to-let loans during the first six months of the year, marginally more than was lent during the second half of 2004.
But within this total the number of mortgages fell by four per cent to 94,000 compared with the previous six months, although the decline was less marked than the 18 per cent drop recorded in the second half of last year.
The group said the buytolet market was continuing to slow in line with the overall housing market, which has seen price growth stall in recent months.
The buy-to-let mortgage market is now worth a total of £63.5 billion, with about 632,000 outstanding loans, representing seven per cent of the total residential mortgage market.
During the first half of the year the proportion of people who were at least three months in arrears on their mortgage repayments rose slightly to 0.7 per cent from 0.66 per cent during the final six months of 2004.
But the CML said the rise had been less than that seen for the mortgage market as a whole, and was still below the 0.87 per cent of people who were in arrears across the entire market.
It added that the maximum amount lenders would advance for an investment property had remained unchanged for nearly five years at 80 per cent of the property's value.
Andrew Heywood, CML senior policy adviser, said: "As the housing market continues on its soft landing, it is no surprise the buy-to-let sector follows suit.
"Our half-yearly figures suggest the market is in robust shape, and the recent cut in interest rates by the Bank of England will serve to buoy up the sector in the coming months.
"However, lenders will not be complacent, and will keep a close eye on lending to ensure it is responsible and sustainable." n Bradford & Bingley and Barclays have become the latest of the major lenders to announce mortgage rate cuts.
The former building society said it would be passing on the full quarter point reduction to its customers, reducing its standard variable rate to 6.59 per cent from September 4.
But Barclays said it was cutting its mortgage rate by only 0.2 per cent to 6.59 per cent from the beginning of September for both new and existing Barclays and Woolwich customers.
It joined Royal Bank of Scotland Group which on Monday announced that it would not be passing on the full quarter of a point reduction to its borrowers, trimming its rate by only 0.2 per cent to 6.59 per cent. Nationwide Building Society only passed on 0.1 per cent of the cut to its customers, and Skipton Building Society trimmed by 0.2 per cent.