The buy-to-let sector could be entering another period of stabilisation, according to recent analysis carried out by Mortgage Brain.
The cost of buy-to-let mortgages remain at record lows, with little movement in costs and rates over the last three months.
As an example, a 60% and 70% loan-to-value (LTV) two year tracker and a 60% LTV three and five year fixed have all remained stable over the past three months, with buy-to-let mortgage costs static when compared to the costs at the start of March 2018.
Over the same period the cost of a 70% LTV three and five year fixed rate buy-to-let mortgage dropped by just 1%. This fall in cost, while marginal, does offer potential buy-to-let investors a yearly saving of £108 and £126 respectively on a £150,000 mortgage.
At the other end of the scale, the cost of a 60% and 80% LTV two year fixed and an 80% LTV two year tracker and three year fixed, have all risen by 1% since March 2018. However, the biggest movement witnessed over the past three months came in the form of a 70% LTV two year fixed, which now costs 3% more than it did in March. This equates to an annualised cost growth of £198.
Mortgage Brain’s data shows that the buy-to-let market still remains in a healthy position compared to this time last year, though, with cost reductions for the majority of buy-to-let products over the past year.
With a current rate of 2.13%, the cost of a 60% LTV two year fixed buy-to-let mortgage, for example, is now 4% lower than it was in June 2017. Additionally, a five year fixed (70% LTV) is now 4% lower, while a 3% dip has been recorded for a two and five year fixed buy-to-let mortgage.
Mortgage Brain’s research also explored the ‘true cost’ differences between buy-to-let mortgages and mainstream residential products. The latest figures (as of June 1 2018) reveal that the price of an 80% LTV five year fixed buy-to-let mortgage is 25% higher than the same product type for a residential mortgage.
Equally, an 80% LTV two year fixed buy-to-let mortgage costs 20% more than its residential equivalent, while a 60% LTV two year buy-to-let tracker costs 12% more.
“Our latest BTL product data analysis shows that while there’s little to get excited about in terms of rate and cost movement over the past three months, the longer term analysis is still favourable with the majority of products benefiting from costs reductions over the past 12 months,” Mark Lofthouse, CEO of Mortgage Brain, said.
“The Bank of England’s decision to hold base rates last month should also be welcome news to borrowers as they can continue to make the most of the record lows in terms of costs in the BTL market.”