Buy-to-let
Competition is driving buy to let lenders to cut their charges and fees, as well as to offer longer-term fixed rates, according to the latest data from Mortgages for Business.
On average the effect of fees and charges on buy-to-let mortgages was to raise the overall cost for comparison by just 0.54 per cent pa in Q3, the new Buy-to Let Mortgage Costs Index shows. This is down from 0.58 per cent in the second quarter of 2014.
However, beneath this overall trend there is also a growing divide between fees for buy-to-let borrowers at different loan-to-value (LTV) ratios.
Charges for low LTV (up to 65 per cent of property value) and medium LTV (from 65 per cent to 75 per cent) buy-to-let mortgages have fallen dramatically, while charges for high LTV (80 per cent and above) loans have increased.
David Whittaker, managing director of Mortgages for Business comments: “Healthy competition is good news for landlords, who can now choose from a pool of in excess of 700 different buy to let mortgages. Meanwhile, the wider benefits of more buy to let funding are being felt by everyone in the private rented sector – including tenants who have seen a growing supply of homes to let this year.
“This is a vote of confidence in landlords, at a time when lenders remain under serious pressure to maintain the safest possible loan books.
“Yet the details are even more encouraging. Prioritising middle and lower LTVs is prudent – but the most encouraging signs are lenders offering landlords what they need.
“Longer-term fixed rates are the best option for landlords looking to protect their future income and minimise any risk associated with interest rate rises, and there are now many more of these options available.”
