Buy-to-let lenders trim margins to stay competitive

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Buy-to-let lenders are reducing their margins to stay competitive, according to Mortgages for Business.

The firm says five-year fixed rate buy-to-let mortgage prices continued to fall in Q1 despite swap rates rising.

The findings come in the firm’s latest Buy to Let Mortgage Index.

The index adds: “the costs were absorbed across low, medium and high LTV products, making five-year fixes even more attractive to landlords seeking certainty over their outgoings in the longer term”.

Lenders also absorbed more costs across two and three year fixed rate products.

Over the quarter, the average cost of limited company landlord fixed rates also fell, except on five-year fixed rates.

The average price of these rosed by 10bps from 4.2 per cent to 4.3 per cent.

There were 16 lenders offering limited company buy-to-let in Q1, unchanged on Q4 2018.

The total number of these products increased by 1 per cent in Q1.

The index also found that the number of arrangement fee-free buy-to-let mortgages grew for the fourth consecutive quarter.

Nearly one fifth (19 per cent) of all products had no lender arrangement fee in Q1, up from just 11 per cent in Q2 2017.

Mortgages for Business chief executive David Whittaker says: “Change has been the only constant in the buy-to-let market in recent years so we felt it was time to take a more holistic approach to tracking and analysing industry developments.

“This new Buy to Let Mortgage Index combines and replaces four previous indices plus our commentary on the money markets.

“Whilst the current picture shows that lenders and landlords have much to accommodate, the data reveals that slowly, both are moving towards solutions which should keep buy-to-let a popular if less prolific investment in the years to come.”

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