Its five-year fixed rate mortgage has been reduced by 0.25 basis points to 5.04 per cent, a 5.4 per cent annual premium equivalent.
Rates were also cut on Keystone’s three-year discounted tracker product, which has been reduced by 0.3 basis points to 4.59 per cent (5.3 per cent APR).
According to a spokesman for the lender, increased market competition motivated the cuts, with long-term fixed-rate products, in particular, proving to be popular in the current economic environment.
Keystone’s Classic range offers borrowers loans of up to £400,000 at 80 per cent LTV and loans of up to £600,000 at 75 per cent LTV.
Within this range there are three-year discounted tracker products, as well as fixed rates over three and five years on standard residential buy-to-lets, multi-unit and houses in multiple occupation.
The Premier range, meanwhile, was created for borrowers seeking loans of between £600,000 and £1m at 70 per cent LTV, with a similar range of products available across standard mortgages, multi-unit mortgages and houses in multiple occupation.
The Keystone’s buy-to-let mortgage range comes with an arrangement fee of 2.5 per cent, which is added to the loan, and early repayment charges that start at 5 per cent in year one.
Borrowers with three-year rates will then pay an early repayment charge of 4 per cent in year two and 3 per cent in year three, which has been extended to 2 per cent in year four and five for those who took out the five-year rates.
REACTIONS
Provider view
David Whittaker, managing director of Keystone, said: “Since February, investors have responded well to our improved offering, particularly the 80 per cent LTV rates in the Classic range and the higher loan amounts – to £1m – in the Premier range. Our products have always been criteria- rather than rate-led offerings but we have been in talks with Aldermore, (which funds Keystone), and are delighted to announce that the bank has found room in its margins to re-price downwards.”
Adviser view
Stuart Cunningham, director of operations at Norwich-based Commercial Trust, said: “The decision by Keystone to reduce its fixed-rate product range caters to the current appetite of larger commercial investors to lock-in set monthly payments, as guidance from the Bank of England suggests the base rate may soon begin to rise. It reflects a welcome trend in the buy-to-let market to offer enticing funding options to a diverse range of borrowers, including professional investors, whose ability to expand has been stifled by maximum portfolio restrictions. However, as the last year has seen many lenders loosen their conditions and reveal increasingly competitive rates, what might previously have been a market-leading range is no longer so. We now have the ability to place 80-85 per cent LTV business at comparable and cheaper rates for a range of borrowers.”
Charges
Includes a lender arrangement fee of 2.50 per cent, which is added to the loan. Rent-to-interest cover for both ranges has been set at 125 per cent, 130 per cent or 150 per cent of the product pay rate.
Verdict
Although the reductions were very small, any move that sees prices pushed down should be welcomed. Five-year fixed rates are unsurprisingly popular right now, given that the base rate is at a record low, so it makes sense for lenders to do whatever it takes to remain as competitive as possible.
