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BTL rates begin to shift upwards, says online broker

New research from online mortgage broker Property Master has revealed that the cost of the majority of fixed-rate buy-to-let mortgages appear to have started a drift upwards.

Last month Property Master warned this was likely following the decision by the Bank of England to revise upwards its forecasts for growth in the UK economy, widely seen as the Bank positioning itself for more rises in the base interest rate than the financial markets had previously been anticipating.

“It looks very much as if the Bank fired the gun on interest rate rises in its Inflationary Report last month,” Angus Stewart, Property Master’s chief executive, said. 

“We have seen in our most recent Mortgage Tracker increases in the monthly cost of five out of the six categories of fixed-rate buy-to-let mortgages we track. Of course, a great deal of uncertainty persists as Brexit is still not resolved and now the search is on for a new Prime Minister.”

Stewart said there was still some comfort for landlords facing increased rates in that competition amongst mortgage lenders for business has been fierce in recent years, fuelling the growth in the number of buy-to-let mortgage offerings on the market to a ten-year, post-financial crisis high. 

“There are an estimated more than 2,100 products to choose from but with lending criteria varying considerably between the operators, landlords cannot assume that all of these possibilities are open to them,” Stewart added.

Property Master’s Mortgage Tracker picking up increases in the price of fixed-rate buy-to-let mortgages came in the same week the Tenant Fees Act was officially introduced.

Stewart said the increases in mortgage costs were particularly unwelcome in the current climate of rising regulatory costs. “This new Act which bans landlords and letting agencies from charging fees to tenants for things such as referencing, inventories and contracts, and limits deposits to five weeks’ rent continues still further the squeeze on landlord finances,” he explained. 

The Mortgage Tracker found that the monthly cost of five-year fixed-rate buy-to-let mortgage offers for 50% loan-to-value was up by £7 in June compared to the previous month, with five-year fixed rates for 65% of the value of a property rising month-on-month by £5. 

Five-year fixed-rate buy-to-let mortgage offers for 75% of the value of a property was the only one of six categories tracked to fall in monthly cost, but even then only by £1.  

The three categories of two-year fixed-rate buy-to-let mortgages tracked all increased, with the largest rise being £6 per month.

Property Master’s Mortgage Tracker follows a range of buy-to-let mortgages for an interest only loan of £150,000, with deals from 18 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 June 1, 2019.

Property Master, which launched almost two years ago, is aiming to shake up the buy-to-let mortgage market currently served by approximately 12,000 mortgage brokers. It has already attracted financial backing from a broad range of private investors, including a minority stake being taken by LSL Property Services, whose estate and letting agency brands include Your Move and Reeds Rains. 

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