Cost of buy-to-let loans squeezed

Mortgage costs in the buy-to-let market have started to fall over the last quarter, according to new data from Mortgage Brain.

Its quarterly figures show the cost of a two-year buy-to-let tracker (at 60 per cent LTV) is now 3 per cent lower than it was three months ago. 

Higher LTV deals have also reduced in cost, although by a smaller margin.

The same product with a 70 per cent LTV now costs 2 per cent less than it did in March, while the 80 per cent LTV product is 0.5 per cent cheaper. 

Mortgage Brain says these reductions may be small, but they offer property investors annual savings of £234, £144 and £36 respectively on a £150,000 mortgage. 

There was a similar reduction on the cost of longer term deals: on five year fixed rate buy-to-let loan there was a 2 per cent reduction in costs at both 60 per cent and 80 per cent LTV.

This latest data analysis also shows the difference in cost between buy-to-let loans and mainstream residential mortgages. A five year fixed-rate buy-to-let loan (at 80 per cent LTV) is 19 per cent more expensive than the equivalent residential loan.

However, a two-year tracker (at 60 per cent LTCV) costs only 8 per cent more than its residential equivalent. 

Mortgage Brain’s chief executive Mark Lofthouse says:  “With new regulations, tax changes, and the potential for base rate rises coming into play, the buy-to-let landscape remains as complex as ever.

“While the mortgage cost movement over the past three months has been minimal, the majority of this movement has been favourable for borrowers. With specialist advice and support from brokers, buy-to-let investors and potential landlords can continue to make the most of the low rates in this market.”

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