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Buy-to-let rates fell in Q1

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The average rate charged on a buy-to-let mortgage, with fees factored in, decreased by 0.33% in the first three months of 2013.
Buy-to-let rates fell in Q1

According to data released by specialist buy-to-let broker Mortgages for Business, the cost of two-year fixed rates up to 65% loan-to-value (LTV) saw the biggest fall, coming down 0.69% over the quarter to stand at 5.27% (with fees factored in).

Headline rates of interest, without allowing for fees, fell by an average of 0.27% in the first quarter, suggesting that overall fees also fell slightly.

The difference in the cost of three-year and five-year fixed rate buy-to-let mortgages shrank during the first three months of the year, with many five-year deals now priced at similar levels to their three-year counterparts.

The margin over LIBOR charged on buy-to-let tracker deals fell from 0.7% to 0.4% in the first quarter.

The total number of buy-to-let mortgages available fell from 444 on 1st January to 434 at the end of the quarter, but Mortgages for Business believes this is explained by some of the 27 lenders currently active in the sector simply dropping their least popular deals, rather than being part of a downward trend.

Only 9% of the buy-to-let mortgages available in Q1 2013 came with no arrangement fee, but that was a small improvement on Q4 2012 when 8% were arrangement-fee-free.

Of the remainder, 43% had arrangement fees of between 1% and 3% of the loan amount, while 48% came with a flat fee. The average flat fee is now £1,534, down £24 on Q4 2013.

Mortgages for Business said: “Overall these figures are good news for borrowers and demonstrate that competition between lenders has intensified.”

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