Mixed movement in BTL market as mortgage costs waver

Fresh figures from Mortgage Brain’s product data analysis show that the buy-to-let (BTL) mortgage market remains ‘unsettled’, with mixed movement seen in the cost of BTL products over the past quarter.

For example, the cost of a 60% and 70% two-year tracker BTL mortgage is now 2% more than it was three months ago, while a 60% loan-to-value (LTV) two-year fixed now costs 1% more than it did in August.

The costs for a two and five-year fixed (80% and 60% LTV respectively), however, have remained stable over the past three months when compared to the beginning of August.

With a current rate of 2.09% and 2.44% respectively (as of November 1 2018), the 2% cost increase for the 60% and 70% LTV two-year tracker mortgages equate to an annualised increase of £126 and £162 on a £150,000 mortgage.

There is some good news, despite this, with the data showing that the costs of a 70% LTV two and three-year fixed, and an 80% LTV five-year fixed, have all come down by 2% over the same period.

In financial terms, the 2% drop in the cost of these mortgages offers potential investors and BTL borrowers a potential saving of up to £144 over the past quarter, or £432 per annum when compared to this time last year.

The analysis also shows the true cost differences between BTL mortgages and mainstream residential products. For instance, the cost of the 80% LTV five-year fixed BTL mortgage is 24% higher than the same product type for a residential mortgage.

Similarly, an 80% LTV two-year fixed BTL mortgage costs 20% more than its residential counterpart, while a 60% LTV two-year BTL tracker costs 12% more.

Mark Lofthouse, chief executive officer of Mortgage Brain, commented: “With little movement in mortgage costs in the BTL sector over the past three months our latest analysis shows that, while there isn’t too much to get excited about, there are still cost savings to be made with a number of BTL products offering favourable rates.”

“The BTL market remains unsettled though, and although there are plenty of predictions for further fluctuations over the coming months, any changes to costs and rates are expected to be slow and marginal.”