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Buy-to-let mortgage costs are rising

The cost of taking out a buy-to-let mortgage has started to rise, following the Bank of England’s decision to increase the base rates at the tail end of last year.

Several lenders have increased the cost of their buy-to-let products in recent weeks.

The cost of a two-year buy-to-let tracker with a 60% and 70% loan-to-value (LTV), for instance, is now 3% higher than it was in November 2017.


With an existing rate of 1.79% and 2.14% respectively, the 3% hike equates to an annualised increase of £216 on a £150,000 mortgage, fresh data from Mortgage Brain shows.

The cost of an 80% LTV two-year fixed at 3.44% is now 2% higher than it was three months ago, while its 60% and 70% LTV counterparts, and a 70% LTV three-year fixed, are all 1% higher than they were at the beginning of November 2017.

However, borrowers looking for a longer term deal can expect to potentially secure a cheaper rate product, with Mortgage Brain’s latest figures revealing a 2% reduction in cost over the past three months for a 70% LTV five-year fixed and a 1% cost reduction for the same product with a 60% and 80% LTV.

Despite the recent fluctuations in rates and costs, the buy-to-let sector has also seen the strongest performance in terms of product numbers and availability over the past 12 months.

An additional 721 products were introduced into the UK buy-to-let market during 2017, representing a 32% rise in overall product availability – up from 2,238 in January 2017 to 2,959 as of 15 January 2018.

Mark Lofthouse, CEO of Mortgage Brain, said: “It looks like the Prudential Regulation Authority changes, coupled with what could be seen as the start of a number of interest rate rises, is starting to affect the cost of mainstream BTL mortgages.

“Buy-To-Let product numbers are at a new high, however, and there are still pockets of cost reductions and savings to be had for potential landlords and property investors. With the BTL market set to become even more complex in 2018, though, we might be on the start of a new path in terms of mortgage cost movement compared to the past few years.”

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