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Buy-to-let costs continue to fall

Mortgage costs in the buy-to-let market have been falling since the second quarter of 2019 and the number of products available has risen by 11% in one year.

According to Mortgage Brain’s quarterly product data analysis, the cost of a 60% LTV two-year fixed buy-to-let mortgage is now 1.9% lower than it was three months ago, which represents an annual saving of £144 on a £150k mortgage.

The cost of a 70% LTV three-year fixed buy-to-let mortgage has fallen by 1.1% – an annual saving of £90 on a £150k mortgage compared to three months ago.

The Mortgage Brain data also shows that borrowers looking to fix for longer can benefit from better annualised savings. For example, a 80% LTV five-year fixed buy-to-let mortgage is now 3.5% lower compared to 12 months ago, representing an annual saving of £324.

Competitive market

One factor driving down the costs of BTL mortgages is the number of products now available on the market. The Mortgage Brain analysis revealed that there are now 3,859 BTL products on the market from mainstream lenders, which represents an increase of 11% compared to a year ago.

Buy-to-let v residential

The Mortgage Brain analysis also reveals that the cost of buy-to-let mortgages remains higher when compared to mainstream residential mortgage products. Data on (1 September 2019 shows that the cost of a 80% LTV five-year fixed product is over 16% higher than the same product for a residential mortgage.

The difference in the cost of tracker mortgages are less, with the cost of a two-year 70% LTV tracker buy-to-let being 4.75% higher than the residential equivalent.

Mark Lofthouse, CEO of Mortgage Brain, commented: “Overall the message for the BTL market is positive; especially for investors looking to fix for a longer term. The cost of BTL mortgages continue to reach historic lows, with the market remaining competitive given the number of BTL mortgages currently on the market.”

By Joanne Atkin

Source: Mortgage Finance Gazette