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Written by rosalind renshaw

High loan-to-value mortgages in the buy-to-let sector are coming down in price.

The gap between 65% and 75% LTV rates is now half what it was in early 2012, and buy-to-let average rates have fallen by 0.25% in the second quarter of this year.

According to specialist broker Mortgages for Business, it demonstrates that lenders’ appetite for higher LTV deals has increased.
 
Its new report entitled Buy to Let Mortgage Rates: The Real Costs (Q2 2013) suggests that in the current market the two key LTV price points are 65% and 75%.

Interestingly, it says that pre-credit crunch 65% LTV products did not exist: at that time the levels were 75% and 85%. However, as lenders started to return to the market in 2011 there was a clear preference for lower LTV mortgages, such that in early 2012, 65% LTV rates were around 1% cheaper than their 75% counterparts.

Since then the gap has narrowed and today stands at 0.46%.
 
The report also shows that when factoring in fees (arrangement, valuation and legal), buy-to-let mortgage rates fell by an average of 0.25%.

By contrast, five-year fixed rates have risen on average by 0.20% since the beginning of May.
 
David Whittaker, managing director of Mortgages for Business, said: “It is clear that although swap rates have retreated somewhat in the past few weeks, longer-term swaps have remained markedly higher than they were, which probably reflects a greater degree of realism about the long term future for interest rates.

“I suspect that over the coming months, some lenders will look to increase longer-term fixed rates in order to re-establish margins lost.”

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