Software company Mortgage Brain has released information from a recent analysis, which shows that the buy-to-let sector may be about to encounter another period of stabilised results.
As an example, the company has pointed out that a 60% and 70% loan-to-value (LTV) two year tracker and a 60% LTV and five-year fixed have all remained stable over the past three months. This is with buy-to-let mortgage costs remaining static in comparison to costs from the beginning of March 2018.
Looking at the cost of a 70% LTV three-year and five-year fixed rate buy-to-let mortgage, they have fallen by only 1% over the same period. Although this may be seen as a marginal drop in cost, it does present buy-to-let investors with the option for an annualised saving of £108 and £126 respectively on a £150,000 mortgage.
In contrast to these figures, there has been a 1% increase to the cost of a 60% and 80% LTV two-year fixed, an 80% LTV two-year tracker and a three-year fixed since March 2018. However, the biggest change over the previous three months has occurred to the cost of a 70% LTV two-year fixed, which now stands at 3% more than it did in March. It now equates to an annualised cost increase of £198.
There is still a positive outlook for the buy-to-let market, compared to this time last year, as Mortgage Brain’s data shows a reduction in costs for the majority of buy-to-let products over the last twelve months.
Buy-to-Let vs. Residential
This analysis also looks at the true cost differences between buy-to-let mortgages and mainstream residential products. As of 1stJune 2018, the figures reveal that the cost of an 80% LTV five-year fixed BTL mortgage is 25% higher than the same product type for a residential mortgage.
Another example is that of the 80% LTV two-year fixed buy-to-let mortgage, which costs 20% more than its residential equivalent. Also, a 60% LTV two-year buy-to-let tracker costs 12% more.
Mark Lofthouse, CEO of Mortgage Brain, has commented: “Our latest BTL product data analysis shows that while there’s little to get excited about in terms of rate and cost movement over the past three months, the longer term analysis is still favourable with the majority of products benefiting from costs reductions over the past 12 months.
“The Bank Of England’s decision to hold base rates last month should also be welcome news to borrowers as they can continue to make the most of the record lows in terms of costs in the BTL market.”