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Rise in buy-to-let products boosts market competition

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  • 03/02/2015
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Rise in buy-to-let products boosts market competition
The number of buy-to-let mortgage products available in quarter four last year reached 817 beating the previous record set in Q3 by over 100 new products.

According to the latest Buy to Let Mortgage Costs Index from Mortgages for Business, products available for landlords rose 16% in Q4 compared to the previous quarter.

The findings indicated that while mortgage rates and fees dropped for low loan-to-value (LTV) ratios, increased competition was needed at higher LTVs where landlords were paying extra fees.

Overall, the effect of charges levied on mortgaged products across all LTVs dropped from 0.54% in Q3 to 0.52% at the end of 2014, with charges for high LTVs rising from 0.84% in Q3 2013 to 0.88% in Q4 by comparison.

Landlords also opted for fixed-rate mortgage deals over tracker mortgages, with low LTV mortgages outperforming their tracker equivalents at two, three and five-year periods.

Mortgages for Business managing director David Whittaker (pictured) said the findings indicated that lenders were opting for the “safest borrowers”.

“It’s astounding that fixed-rate mortgages are already better value than their respective tracker counterparts. Again the real advantage is for the ‘safest’ landlords with the lowest LTV loans,” he said.

“But even though tracker products are a little bit cheaper at higher LTVs, in these cases too it soon won’t be enough to compensate for the likely increase in cost of trackers when rates inevitably rise. If customers are paying only a few percentage points above the negligible Bank Base Rate, then if this jumps it could mean a huge proportional increase in future costs.”

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