Buy-to-let lenders cut fees

Fees on buy-to-let mortgages raised overall costs by just 0.54% per annum in Q3, down from 0.58% in Q2 and 0.67% at the start of 2013.

Only high LTV loans have seen charges increase. At 80% LTV and above they made up 0.84% of the cost of buy-to-let borrowing in Q3, compared to 0.71% in Q1 2013.

David Whittaker, managing director of Mortgages for Business, said: “Healthy competition is good news for landlords, who can now choose from a pool of in excess of 700 different buy-to-let mortgages.

“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.”

Longer-term fixes are now more popular, as 5-year fixes now make up 19% of the mortgages on the market, compared to 15% in Q2.

In contrast 3-year fixes now make up 17% of all products compared to 19% in Q2, while 2-year fixes, standing at 54%, still dominate in absolute terms but have also dropped from 57% of products in Q2.

Whittaker added: “As we predicted at the start of the year, buy-to-let lending looks set to total at least £25bn 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.

“Intrinsically, all landlords tend to have a long view. Careful buy-to-let borrowers will not be thinking about the precise timing of the first rise in Bank Rate but rather what variable mortgage rates might look like in two or three years’ time.

“So looking ahead, we may see a further increase in longer-term fixed rate mortgage products as lenders respond to an increased demand for products that provide more stability.”