The cost of a buy-to-let mortgage has fallen by almost 3 per cent since February as the market responds to more challenging conditions.
Product analysis by Mortgage Brain revealed a three-year fixed buy-to-let mortgage with a 60 per cent loan-to-value has a current rate of 2.44 per cent (as of 1 May 2017), meaning consumers stand to save an average of £468 a year on a £150,000 mortgage.
Meanwhile, two and three-year fixed buy-to-let deals at 2.5 per cent and 2.74 per cent - both with a 70 per cent LTV - have undergone a 2 per cent reduction in cost over the past quarter, saving landlords £648 and £324 a year respectively.
But the pattern does not apply across the board, with costs remaining unchanged for a 60 per cent LTV two-year fixed rate, a 60 per cent and 70 per cent LTV two-year tracker, and a five-year fixed rate (70 per cent LTV).
On an annual basis, the cost of a two and three-year fixed rate buy-to-let mortgage with an 80 per cent LTV has dropped by 8 per cent, while the cost of a five-year fixed rate buy-to-let mortgage with a 60 per cent LTV has declined by 7 per cent.
Mark Lofthouse, chief executive of Mortgage Brain, said: “It’s really been a period of little activity across the market in the movement of rates and costs over recent weeks and months. The residential market, in particular, has seen very little change since the start of the year.
“Our latest analysis, however, shows that buy-to-let investors are still in a good position to take advantage of the low rates and cost reductions that we’ve seen over the past three months.”
Liz Syms, chief executive at London-based Connect Mortgages, said: “Any rate reductions are always good for consumers. Rates are falling across residential as well as buy-to-let, so it is not unique to the buy-to-let market.
“For lenders there is a demand to get the market share and either look to tweak their criteria or rates. Some are using rate reductions to attract business.
“Limited companies were always charged a bit more, but as the demand has increased they are now the same rate in most cases, and that is driven by demand and competition.”
simon.allin@ft.com
