Five Year Fixed Rate Investment Deals Drop

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The first quarter of 2018 saw the price of five year fixed rate buy to let mortgages fall, according to the latest Buy to Let Mortgage Index as published by Mortgages for Businesses.

Despite an increase in five year swaps a surprising drop in costs was recorded, demonstrating a desire from lenders to remain competitive. Costs were found to be absorbed across low, medium and high loan-to-value products, rendering five year fixes particularly attractive to landlords seeking low interest rates amidst current political and economic uncertainty fueled by Brexit.

Over the first quarter of 2018 the average pricing of rates available to landlords borrowing via limited companies also fell somewhat. However, this was with the exception of five year fixed rates which increased by 10bps from 4.2 per cent to 4.3 per cent.

The number of lenders offering products to corporates remained unchanged at 16. However, the total number of products available increased by 1 per cent which raised availability to 25 per cent of the total market.

19 per cent of all products did not have a lender arrangement fee in the first quarter of 2018, a rise from a mere 11 per cent in the second quarter of 2017. 39 per cent of products have flat fees which are charged at an average of £1,441. For all other products, lenders charge an arrangement fee which is based on a percentage of the loan amount. This is typically 0.5-3 per cent.

Chief executive officer at Mortgages for Business, David Whittaker, said: ‘Change has been the only constant in the buy to let market in recent years so we felt it was time to take a more holistic approach to tracking and analysing industry developments. This new Buy to Let Mortgage Index combines and replaces four previous indices plus our commentary on the money markets.’

He continued: ‘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.’

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