Landlords able to access better costs on buy to let mortgages

Landlords in the UK are able to access even better five year buy to let mortgage rates since the beginning of the year with pricing falling, the latest index shows.

With the cost falling it means that lenders are choosing to reduce their margins to remain competitive, according to the buy to let mortgages index from Mortgages for Business.

These cuts have been seen across low, medium and high loan to value products, making five year fixes even more attractive to landlords seeking certainty over their outgoings in the longer term, the firm points out.

There have also been pricing falls on buy to let products available to landlords operating as a limited company, the number of arrangement fee free products has increased and lenders also absorbed more costs across two and three year fixed rate products.

Over the first quarter of 2018, the average pricing of rates available to landlords borrowing via limited companies fell except on five year fixed rates which increased from 4.2% to 4.3%.

Although the number of lenders offering products to corporates remained unchanged at 16, the total number of products available increased by 1%, lifting availability to 25% of the entire market.

Rates available to limited companies are generally higher than the market average, the report explains, because the cheapest products are typically offered by lenders without the systems or underwriting skills in place to offer products to limited companies.

The index also found that number of lender arrangement fee free buy to let mortgages grew for the fourth consecutive quarter. Nearly one fifth, 19%, of all products had no lender arrangement fee in the first quarter, up from just 11% in the second quarter of 2017.

Some 39% of products have flat fees charged at an average of £1,441. On the remaining products, lenders charge an arrangement fee based on a percentage of the loan amount, typically 0.5% to 3%.

‘Whilst the current picture shows that lenders and landlords have much to accommodate, the data reveals that slowly, both are moving towards solutions which should keep buy to let a popular if less prolific investment in the years to come,’ said David Whittaker, chief executive officer.