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The days of rock bottom BTL mortgage interest rates ‘may be numbered’

It could be the end of the road for rock bottom buy-to-let mortgage interest rates, according to a leading expert.

Buy-to-let landlords now have more choice than ever before when looking for a mortgage, with the number of buy-to-let products currently on the market at a record high.

According to Moneyfacts, there are more than 2,000 buy-to-let mortgage products on the market as lenders step up their efforts to compete for a smaller pool of customers.


But aside from offer a variety in their range, lenders have also been upping the ante in the competition to secure new borrowers by cutting borrowing rates.

“The past couple of years have seen lender competition rise in the buy-to-let market,” said Andrew Turner, chief executive at specialist buy-to-let broker, Commercial Trust. “This has helped to drive buy-to-let mortgage interest rates down and led to an influx of products with cash back incentives, free valuations, free legal services and a variety of competitive fees.”

But while incentives and rates in isolation may seem enticing, they do not offer the full picture.

Turner advises borrowers to take every aspect of the deal, including criteria, into account when assessing the suitability and total cost of a mortgage.

He also urges consumers to recognise that heightened competition has made the buy-to-let market more complex, which partly explains why there are now more than 2,000 products for landlords.

But while he expects to see “a continued trend of creative product options from lenders”, he thinks that lenders may be about to call time on record low-cost loans for landlords.

“The days of rock bottom buy to let mortgage interest rates, may be numbered,” he said.

The past three years has seen buy-to-let mortgage rates drop and hover around historically low levels.

This has partly been down to the Bank of England base rate level, which increased in November 2017, for the first time in a decade – and at the time of writing, remains at 0.75%.

But mortgage lenders are influenced by other factors when setting interest rates - and margins have been tight in recent times.

The number of incentives added on products perhaps underlines that interest rates cannot go any lower, but that lenders are still keen to attract landlord business.

He added: “I am expecting us to see buy to let mortgage rates rise in 2019.

“When the base rate increased again by 0.25% in August, 2018, some lenders absorbed the extra costs and in some cases, even reduced mortgage interest rates.

“I believe that this cannot continue indefinitely, so if you are considering remortgaging, it may benefit you to secure a competitive deal now in case rates do go up.”

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