The quarterly buy-to-let index published by Mortgages for Business shows that of its borrowers applying for BTL finance in Q2, 93 per cent opted for a fixed-rate product.
Of these, 75 per cent plumped for a five-year deal, which the broker claims is due to an uncertain market and because borrowers can take advantage of less strict stress tests to borrow more.
The research also describes a landscape of decreasing fees and charges, with these costs adding an average of 0.55 per cent to the headline rate, the lowest number since 2013. In Q2, 20 per cent of all BTL mortgage products boasted of having zero fees, as compared to 14 per cent in Q3 2017. Additionally, the average flat fee fell, standing at £1,389 versus £1,441 in Q1.
Remortgaging transactions continued their barnstorming run “for purchases across all property types,” says this report. “This can be linked to the surge in the number of purchases made by landlords in the run up to the introduction of the higher rate of stamp duty back in April 2016. These properties are now clear of their Early Repayment Charges, leaving borrowers free to refinance without penalty,” it continues.
Mortgages for Business chief executive David Whittaker says: “At the moment there is very little difference in pricing between fixed and variable rate products. In today’s uncertain economic climate, particularly the road crash Brexit negotiations, fixing makes a lot of sense, especially as the average price is just 3.52%.”