Mon 06 Aug 2018 View all news articles
Some 93% of landlords financing buy-to-let property opted for a fixed rate mortgage in the second quarter of 2018, according to the Buy to Let Mortgage Index recently published by Mortgages for Business.
The most popular choice for landlords transacting via Mortgages for Business – a specialist buy-to-let broker – were five year fixed rates, with 69% of landlords deciding on this option
“We’ve been recommending five year fixed rates for a long time,” David Whittaker, chief executive of Mortgages for Business, said.
“At the moment there is very little difference in pricing between fixed and variable rate products. In today’s uncertain economic climate, particularly the road crash Brexit negotiations, fixing makes a lot of sense, especially as the average price is just 3.52%. Why wouldn’t landlords make them a part of their business strategy?”
According to the index, a rising number of lenders are offering products free from arrangement fees. In Q2, 20% of all products had no fee attached, up from just 14% in Q3 2017. There was also an increase in the other incentives on offer, including cash back, free valuations and free legals for landlords remortgaging property.
By contrast, the average flat arrangement fee rose slightly in the quarter to an average of £1,389. At less than £1,500, however, Mortgages for Business believes this still represents reasonable value.
The index also revealed that the number of lenders offering products to landlords borrowing via limited companies grew by three (The Mortgage Works, Kensington Mortgages and LendInvest) in the second quarter of this year. What’s more, half of all buy-to-let lenders now offer mortgages to corporates.
On an overall basis, pricing stayed fairly flat in Q2 despite a rise in swap rates, suggesting that lenders are continuing to absorb costs in order to remain competitive.
Remortgaging, meanwhile, is continuing to surpass purchases. That said, there were still more buy-to-let purchase transactions by landlords using limited companies.
Lastly, the index revealed that HMOs are producing the highest gross annual yields (at 8.6%).
Source: Property Investor Today
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