Mortgage Brain has reported that while the cost of buy-to-let mortgages remain at record lows, little movement in costs and rates over the past three months means that the buy-to-let sector could be entering another period of stabilisation.
A 60% and 70% LTV two year tracker and a 60% LTV three and five year fixed, have, for example, all remained stable over the past three months with buy-to-let mortgage costs remaining static when compared to the costs at the beginning of March 2018.
The cost of a 70% LTV three and five year fixed rate buy-to-let mortgage fell by just 1% over the same period. The reduction in cost, while marginal, does offer potential buy-to-let investors an annualised saving of £108 and £126 respectively on a £150k mortgage.
By contrast, the cost of a 60% and 80% LTV two year fixed and an 80% LTV two year tracker and three year fixed, have all increased by 1% since March 2018. The biggest movement over the past three months, however, comes in the form of a 70% LTV two year fixed, which now costs 3% more than it did in March and equates to an annualised cost increase of £198.
Mortgage Brain said the buy-to-let market still remains in a healthy position compared to this time last year, with the firm’s data showing cost reductions for the majority of buy-to-let products over the past 12 months.
With a current rate of 2.13%, the cost of a 60% LTV two year fixed buy-to-let mortgage, for example, is now 4% lower than it was in June 2017. A five year fixed (70% LTV) is also 4% lower, while a 3% reduction in cost has been recorded for a two and five year fixed buy-to-let mortgage.
Mortgage Brain’s analysis also shows the true cost differences between buy-to-let mortgages compared to mainstream residential products. The latest figures (as of 1st June 2018) show that the cost of an 80% LTV five year fixed buy-to-let mortgage is 25% higher than the same product type for a residential mortgage.
Similarly, an 80% LTV two year fixed buy-to-let mortgage costs 20% more than its residential equivalent, while a 60% LTV two year buy-to-let tracker costs 12% more.
Mark Lofthouse, CEO of Mortgage Brain, said “Our latest buy-to-let product data analysis shows that while there’s little to get excited about in terms of rate and cost movement over the past three months, the longer term analysis is still favourable with the majority of products benefiting from costs reductions over the past 12 months.
“The Bank Of England’s decision to hold base rates last month should also be welcome news to borrowers as they can continue to make the most of the record lows in terms of costs in the buy-to-let market.”