Buy to let mortgage rates are falling for landlords and property investors who are able to front a large deposit, with promising deals for those who can afford a 40 per cent sum to put down on the property purchase.
In the current mortgage market, the average two-year rate for borrowers with a 40 per cent deposit has dropped from 2.59 per cent to a mere 2.27 per cent over the past 12 months.
Santander has led the way with the cut price deals, having launched a two-year produced at 1.44 per cent, beating the competition. In response, Platform, part of the Co-operative Group, followed suit, with a new deal at just 1.54 per cent.
For a £150,000 loan, monthly repayments on the deals would stand at £596 and £603 respectively. The overall total cost for the Santander product would reach £16,295, whilst the Platform offering would cost £16,464, with each requiring a £1,999 fee.
However, the issues lie for investors unable to meet significant costs. For deals with less than a 40 per cent deposit, the average rate is on the rise. For products with a 30 per cent deposit, the average rate has risen from just 3.02 per cent to 3.17 per cent solely in the last month, meaning that those with less money to put down are put at a higher disadvantage than before.
A representative from broker London and Country, David Hollingworth, attributed the favourable situation for high deposit property investors to the newly stringent lending criteria for landlords. He said: ‘Forthcoming tax hikes and tougher criteria for loans means some landlords are desperate to switch to a better rate. Lenders are fighting over themselves for the best customers – those with bigger deposits.’