BTL mortgage costs start to rise

BTL mortgage costs start to rise

The cost of most mainstream buy-to-let mortgages is starting to climb, with new data from Mortgage Brain showing a number of cost increases over the past three months.

The cost of a two year buy-to-let tracker with a 60% and 70% LTV, for example, is now 3% higher than it was in November 2017. With a current rate of 1.79% and 2.14% respectively (as of 1 February 2018), the 3% rise equates to an annualised increase of £216 on a £150,000 mortgage.

The cost of an 80% LTV two year fixed (at 3.44%), is now 2% higher than it was three months ago, while its 60% and 70% LTV counterparts, and a 70% LTV three year fixed, are all 1% higher than they were at the beginning of November 2017.

However, Mortgage Brain’s latest data shows a 2% reduction in cost over the past three months for a 70% LTV five year fixed and a 1% cost reduction for the same product with a 60% and 80% LTV.

Despite the recent fluctuations in rates and costs, the buy-to-let sector has also seen the strongest performance in terms of product numbers and availability over the past 12 months.

An additional 721 products were introduced into the UK buy-to-let market during 2017, representing a 32% increase in overall product availability – up from 2,238 in January 2017 to 2,959 as of 15 January 2018.

Mark Lofthouse, CEO of Mortgage Brain, said: “It looks like the Prudential Regulation Authority changes, coupled with what could be seen as the start of a number of interest rate rises, is starting to affect the cost of mainstream buy-to-let mortgages.

“Buy-to-let product numbers are at a new high, however, and there are still pockets of cost reductions and savings to be had for potential landlords and property investors. With the buy-to-let market set to become even more complex in 2018, though, we might be on the start of a new path in terms of mortgage cost movement compared to the past few years.”