According to the latest data from the Bank of England, mortgage borrowing has soared. In fact July saw mortgage borrowing leap by £9.79 billion. That’s the biggest monthly rise for three years.

So does that complement the findings of the CBI in the retail sector, and show the British consumer is back, spending and in rude health?

It seems more likely the rise was, in a way, due to an opposite reason.

It would appear the surge in mortgage borrowing was largely down to buy-to-let investors, and had little to do with any new found consumer confidence.

Capital Economics explained why this is so. While the Bank of England has been recording sharp rises in mortgage borrowing, the Council Of Mortgage lenders has been telling a less bullish story. Apparently, the CML has mortgage advances up, but to a much more modest extent. Capital Economics theorises that this is because since last year, the CML has only included regulated mortgages in its figures. This means many buy-to-let mortgages are excluded from the data and hence, or so goes the argument, the discrepancy.

What’s interesting about that conclusion is that data from the Royal Institute of Chartered Surveyors (RICS) tells us that the renting market is booming.

According to RICS, the number of surveyors reporting an increase in rent costs over the three months to the end of July was 30 percentage points higher than those reporting a fall. And that, says RICS, is the highest positive differential it has ever recorded. The survey dates back to 1998.

According to RICS spokesman, Jeremy Leaf: “Economic prosperity and population migration have increased rental demand, making conditions better for property investors.”

His comment brings us back to our suggestion in the story above. That maybe it is immigrants who have been helping to boost retail sales, explaining why the CBI survey was so positive.

As for the beleaguered first time buyer, Mr Leaf added, “However, first time buyers will find it hard to enter the housing market with higher rents making it difficult to save sufficient sums for a deposit.”

Maybe there is an important point to note, one often overlooked when considering the rationale of buy-to-let investors. Why is this form of investment so popular, at a time when returns are not that good, and capital gains are likely to be relatively modest? It seems likely the reason lies in worries over pensions. For many buy-to-let investors, their investment properties are their future pension.

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