Landlords benefit as the cost of mortgages fall

Landlords benefit as the cost of mortgages fall

Landlords in the UK are now finding it easier than at any time in the past few years to either get into the rental market or expand their portfolio, with the price of mortgages dropping and terms improving. 

According to the latest study published by Mortgages for Business, all but the highest loan-to-value mortgages for the buy-to-let sector are dropping in price, which is good news for landlords and tenants, with supply likely to be helped by growing investor confidence. 

The report stated that mortgage charges are falling and lenders are now offering longer fixed rate deals as they try to compete with each other. With the Bank of England indicating that it may increase interest rates next year, this can only be a positive for investors.

Mortgages for Business stated that as many as 19 per cent of all buy-to-let mortgages are now five year fixed rate products with short term fixes becoming less and less prevalent in this area of the sector all the time. 

The company said that the increased competition in the mortgages market for lenders has meant that more are offering longer deals like this, while they also cut mortgage charges and fees. 

It is those who bring a little bit more of their own money to the table who are most likely to get a good deal, the report states. The overall cost of low loan-to-value mortgages up to 65 per cent of property value and median loan-to-value products between 65 per cent and 75 per cent has fallen. Meanwhile, the price of 80 per cent loan-to-value loans has increased. 

On average, the effect of fees and charges on buy-to-let mortgages at the end of quarter three has hit 0.54 per cent, falling from 0.67 per cent at the end of 2013 and 0.58 per cent at the end of quarter two of this year. 

David Whittaker, managing director of Mortgages for Business, said: "Healthy competition is good news for landlords, who can now choose from a pool of in excess of 700 different buy to let mortgages.

"Meanwhile, the wider benefits of more buy to let funding are being felt by everyone in the private rented sector, including tenants who have seen a growing supply of homes to let this year. This is a vote of confidence in landlords, at a time when lenders remain under serious pressure to maintain the safest possible loan books."