Buy to let interest rates are falling due to competitive mortgage market

Landlord Expert
By Landlord Expert October 13, 2011 13:47

David Whittaker, managing director of The Mortgage Business, agreed product pricing would probably continue to trend down as competition in the sector hots up.

"There has been some arrogance from lenders for a while. Landlords will have looked at the products, saw prices were flat and held back from the market, resulting in a stand-off."

"Lenders have been forced to compete their way out of low lending volumes, so rates have been coming down," he said.

Defaqto figures suggest average two-year fixed rates have fallen from 5.78% to 4.86% in the 12 months from September 2010.

Fees have also fallen on all loans apart from two-year fixes, which rose from an average £2,492 to £2,603 last month. Five year fixes have consistently offered the most competitive fees in the market, falling from £2,122 to £1,956.

However, two-year base rate trackers fell from 5.01% in one year, where three year fixed rates have seen a smaller drop from 6.03% to 5.56% and five year rates have reduced from 5.94% to 5.69%.

In August, the average five-year fixed residential rate dropped below 5% for the first time since Moneyfacts began collating the figures, to 4.99%, from a high of 6.24% in September 2009, with further falls expected.

For example, the average rate for a residential two-year fixed rate mortgage is  3.52% with an average arrangement fee of £844. For a five-year fixed rate mortgage, the respective figures are 4.25% and £727.

David Black, Defaqto's insight analyst for banking, said: "For those looking to get into the buy to let market, the last year has seen some positive developments."

Black said both interest rates and arrangement fees have reduced and new lenders have entered the market as existing lenders have expanded their product ranges.

Meanwhile, The Mortgage Works (TMW) is set to to launch a buy-to-let affordability calculator app for Android and BlackBerry smart phones on 10 October.

The app, titled "Buy to Let Affordability Calc", is based on TMW's "how much can be borrowed?" calculator and optimised for Android and BlackBerry-powered devices. An iOS app for Apple devices is also being developed.

 

Landlord Expert
By Landlord Expert October 13, 2011 13:47

Membership Login

Register| Forgot Password?

Recent Member Comments

  • User AvatarJohn Walters { need advice on a difficult situation please. I have a very difficult and aggressive tenant in Bolton who refuses to pay rent or move out... } – Jun 01, 10:41 AM
  • Philip Haworth { Is there a letter to raise order for possession of the property. }
  • User AvatarLandlord Expert { We do not know of any issues. There have been 3 questions submitted today and have been published although I see none for you. Providing... } – Apr 20, 4:51 PM
  • User AvatarJazz Sounds { Is something wrong with your site? In your "ask a question" section I am unable to post my question. I am also unable to view... } – Apr 18, 10:37 AM
  • User AvatarDiane Lo { Tenant sublet his room to airnub guest without my knowledge. The airnub guest injured her foot and is now trying to claim compensation from us.... } – Apr 05, 10:55 AM
  • Older »

News Archive