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BTL tracker points to popularity of fixed rate deals

  • 26/07/2019
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BTL tracker points to popularity of fixed rate deals
The average rate for a buy to let mortgage was 3.1 per cent and for a limited company product 3.7 per cent in Q2, the latest Mortgages for Business Buy to Let Mortgage Index showed.


The index added six more lenders to its number during the quarter, including Fleet Mortgages which returned to the market, Buckinghamshire Building Society, Hampshire Trust Bank and Masthaven.

The total number of mortgage products dropped to 1,711 during Q2, down 12 per cent or 213 compared to Q1.

This was largely the result of Keystone Property Finance and Zephyr Home Loans consolidating their ranges.

However, ranges expanded at the specialist end of the market for portfolio landlords and those with complex borrowing requirements

The vast majority of landlords, 95 per cent, took out fixed-rate mortgages


Fixed-rate mania

Five-year fixes were the most popular, accounting for 72 per cent of all BTL mortgages taken out in Q2, up from 71 per cent in Q1. This partly reflected the less stringent stress tests now permitted. 

The average rate on five-year BTL fixes was 3.51 per cent in Q2, down from 3.58 per cent in Q1.

For five-year trackers it rose to 3.09 per cent against 3.03 per cent.

Two-year fixes were preferred by 21 per cent of landlords in Q2, up from 18 per cent in Q1. Just 4 per cent of landlords opted for a two-year fix back in Q4 2018.

Mortgages for Business suggested that this could be because landlords are not anticipating a rate increase.

The average rate on a two-year fixed mortgage was 3.09 per cent in Q2, down from 3.14 in Q1.

The average two-year tracker rate was 2.93 per cent, down from 3.04 per cent in Q1.

For limited company products, the average rate for a five-year fix was 3.7 per cent, down from 4.1 per cent. For a two-year fix it was also 3.7 per cent, up from 3.6 per cent.

The average variable rate for limited company products was 3.9 per cent, down from 4 per cent.


Margin & fees

Lenders margins fell to 0.54 per cent in Q2, a marginal decrease from 0.55 per cent in Q1. Looking specifically at low loan to value products, the margin was 0.48 per cent.

There was a shift away from percentage fees and towards fee free and flat fee products during Q2.

Percentage fees applied on 40 per cent of products, down from 46 per cent in Q1.

Limited company transactions accounted for 52 per cent of all BTL completions by value and 45 per cent by number in Q2, indicating that the average loan was larger for landlords using corporate structures.

The Mortgages for Business Buy to Let Mortgage Index tracked mainstream providers, challenger banks and specialists covering twelve standard product ranges and for a £150,000 mortgage.

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