Landlords across Britain are benefitting from falling mortgage charges and longer fixed rate deals with fees tumbling for all except the highest LTV loans, new research shows.
Short term fixes are now less prevalent as longer initial terms form a growing proportion of mortgages and almost one in five of all available buy to let mortgage products (19 per cent) are now five year fixed rate deals, says the latest index from Mortgages for Business.
A report seen by Property Wire reveals that overall competition is driving buy to let lenders to cut their charges and fees as well as to offer longer term fixed rates.
On average the effect of fees and charges on buy to let mortgages was to raise the overall cost for comparison by just 0.54 per cent per annum in the third quarter of the year.
This is significantly lower than the average of 0.67 per cent extra in fees and charges seen at the start of 2013, and down from 0.58 per cent in the second quarter of 2014.
“Healthy competition is good news for landlords, who can now choose from a pool of in excess of 700 different buy to let mortgages,” David Whittaker, managing director of Mortgages for Business, told Property Wire.
“Meanwhile, the wider benefits of more buy to let funding are being felt by everyone in the private rented sector, including tenants who have seen a growing supply of homes to let this year.
“This is a vote of confidence in landlords, at a time when lenders remain under serious pressure to maintain the safest possible loan books.”
By contrast three year fixed rate deals have dropped from 19 per cent to 17 per cent of all products in the third quarter while two year fixes, standing at 54 per cent, still dominate in absolute terms but have also dropped from 57 per cent of products in the second quarter.
“As we predicted at the start of the year, buy to let lending looks set to total at least £25 billion in 2014. However, as the industry starts to look ahead to 2015, the most positive signs aren’t from the headline figures but in the detail of how lenders are responding to demand for longer term deals,” added David.