‘Mixed picture’ for buy-to-let mortgage rates, says online mortgage broker

New research from online mortgage broker Property Master has revealed the cost of three out of six categories of fixed rate buy-to-let mortgages increased in February when compared to last month. However, the remaining three categories have all seen falls in price.

According to Property Master, a digital start-up which uses algorithms to match the requirements of individual private landlords against the whole buy-to-let mortgage market, five-year fixed rate mortgages - which have been steadily gaining in popularity amongst buy-to-let investors - remain the best value for landlords with declines in cost year-on-year of up to £24 a month.

Property Master’s February 2019 Mortgage Tracker finds that five-year fixed rate offers for 65% and 75% of the value of a property are all down year-on-year, with savings for each of these mortgages standing at £24 and £15 per month respectively.

It also shows that the cost of most two-year fixed rates tracked are up year-on-year, with the cost of a two-year fixed rate for 50% of the value of a property up by as much as £40 per month.

The Mortgage Tracker follows a range of buy-to-let mortgages for an interest-only loan of £150,000, with deals from 18 of some of the biggest lenders in the buy-to-let market - including Barclays, BM Solutions, RBS, The Mortgage Works, Godiva and Precise - all tracked.  Figures for this month’s Mortgage Tracker were calculated on deals available on February 1, 2019.

“Brexit continues to cloud the outlook for interest rates, but many commentators are pencilling in a move upwards in May,” Angus Stewart, Property Master’s chief executive, said.

“The situation is more confusing still for landlords given that it is the start of the year and there is a flurry of new deals out from lenders – some better than others.”

He said that landlords shopping around need to also remember that some lenders set higher interest cover ratios, requiring rents to cover at least 145% of their mortgage payments, while others are wary of lending to landlords with more than three properties. 

“Then there is the need to factor in product fees which our research shows can average between £658 and £1,212,” he added. 

Property Master launched nearly two years ago with the aim of shaking up the buy-to-let mortgage market – which is currently served by approximately 12,000 mortgage brokers.  Since launching, it has attracted financial backing from a wide range of private investors, including a minority stake being taken by LSL Property Services.