Buy to let surges ahead
Lending for buy-to-let surges on, with the value of loans up by 31% compared to last year. Large numbers of people have now been priced out of buying and rents are rising. Information from The Council of Mortgage Lenders (CML) showed £5.1bn was advanced to landlords in the three months to the end of June, an increase of 21% on the first quarter. The trend will presumably continue, since the Governor of the Bank of England has stated that interst rates will remain low until at least 2016.
None of this credit creates any new wealth, nor does it result in any increase in wealth-creating capacity. All it is doing is to concentrate property ownership into fewer hands. It will also help propel the UK economy on a trajectory which will send it into a property boom, ending in a bust around 2026; rising house prices in the south east of England suggest that things are already on course.