Buy-to-let lending is set to increase further after two years of rising demand and supply, the Bank of England claims.
In its Credit Conditions Survey the Bank highlights buy-to-let lending as an area that has grown in supply and demand since 2009.
The report states that growth in the private rented sector means buy-to-let lending could continue to grow.
But it says it is unlikely that rises in BTL lending will fill the gap left by the reduction in first-time buyer lending.
In recent discussions with the Bank of England most lenders noted that the BTL market was unlikely to drive a wider housing market recovery, given its relatively small size.
The report states that buy-to-let lending was hit harder after the financial crash as investors were sensitive to house price drops due to a focus on capital gains.
But it states: “Over the past two years however, that pattern of lending has to some extent reversed, with gross BTL lending having risen while total gross mortgage lending has been broadly unchanged.”
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