The same BTL mortgage deal that is worse for existing customers?

The average buy-to-let mortgage rates for some typical two-year fixed rate deals favoured by landlords have doubled since the start of the year, it has been revealed. According to Property Master's Mortgage Tracker, the average rate for a typical £160,000 BTL mortgage fixed for two years for a Loan to Value (LTV) of 60% had more than doubled since the start of this year – from 1.69% in January to 3.43% in August. This took the monthly cost, including fees, from £262 to £494, an increase of £232. The online buy-to-let mortgage broker also found that the same mortgage fixed for five years had also increased dramatically from 1.94% in January to 3.5% in August - an increase in monthly costs, including fees, from £273 in January to £481 in August, up £208. 'Cost of buy-to-let mortgages continues to rise inexorably' Angus Stewart, Property Master's chief executive, said: "The cost of buy-to-let mortgages continues to rise inexorably. "Obviously, much of this reflects the Bank of England's decision to hike interest rates for the sixth time earlier this month but there are other factors at play too. "We are seeing reduced competition in the buy-to-let mortgage market caused by a combination of factors with some lenders using higher rates to manage customer demand, whilst others are taking the opportunity to widen their margins." He added: "We have said for some years that increased regulation and higher costs were leading to the professionalisation of the private rented sector. "In reality, this will mean fewer but larger landlords. 'Unaffordable rises in mortgage costs' "For many of the smaller players in this market, unaffordable rises in mortgage costs will undoubtedly lead them to conclude buy-to-let no longer works for them. "Indeed, the latest figures from HMRC show a dramatic increase in takings from Capital Gains Tax suggesting many landlords are deciding this is the moment to sell-up." The Property Master Buy-to-let Mortgage Tracker follows 30 lenders who constitute around 75% of total BTL mortgage lending.

by Readers Question

9:44 AM, 11th December 2023, 2 years ago 4

Categories:

BTL mortgages Landlord News Landlords Questions

Hi, The mortgage lenders have got creative with BTL deals of late. Higher fees for lower rates, but this bit of creativity is a bit well, err, bonkers!

So, here is the deal for new customers:
2 Year Tracker, 3% Product Fee, 5.49% Interest Rate, 75% LTV

And for existing customers on a product transfer:
2 Year Tracker, 3% Product Fee, 6.29% Interest Rate

Notice anything? Well done if you spotted that there is no LTV requirement, I hadn’t missed it off by accident. I also checked with them and it’s 100% real.
It seems that removing an LTV requirement has a cost of 0.8% on the interest rate.

I find this incredibly odd, particularly as the likelihood of being over 75% on a product transfer is low.

Is this a one off? Is this a sign of things to come? Has anyone else seen this kind of deal?

Thank you,

Mark

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Tags: BTL, btl interest rates, BTL landlord offers, BTL mortgage, btl mortgage lender

Comments

Easy rider

Member Since September 2023 - Comments: 173

10:27 AM, 11th December 2023, About 2 years ago

Just like the government, mortgage lenders have a vested interest in avoiding mass repossessions. They need landlords to be able to refinance.

With property prices expected to fall considerably (Bank of England says banks could cope with a 30% reduction in house prices), interest rates not forecast to fall significantly, lenders need to get creative. This is just the tip of the iceberg in my opinion.

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Dylan Morris

Member Since August 2016 - Comments: 1190

11:42 AM, 11th December 2023, About 2 years ago

Makes sense the lender already has the mortgage on the property and there’s nothing they can do about the high ltv, so why not collect a 3% product fee from your existing borrower.I wonder what the tracker rate is ?

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Dylan Morris

Member Since August 2016 - Comments: 1190

11:50 AM, 11th December 2023, About 2 years ago

Sorry just noticed the rate is quoted in the article.

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JaSam

Member Since March 2022 - Comments: 137

2:53 PM, 11th December 2023, About 2 years ago

My guess is that it will stop highly geared landlords getting washed out but it will trap them to that lender as they won’t be able to switch if >75%. They will simply add the fees to the loan and pay the extra interest charges. So as long as the rent covers the charges they might survive but expect any profit and equity to be wiped out! I would sell up rather that get trapped especially avoid a 2 year tracker as in another 2 years its yet more fees. 5 year fix would be safter if you want to try and ride out the storm. Highly geared with low ROI are in trouble if renewals is due within the next 2 years.

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