Fluctuating costs ‘unsettle’ BTL mortgage market

New figures released from Mortgage Brain show that the buy-to-let (BTL) mortgage market remains ‘unsettled’ with mixed movement seen in the cost of BTL products over the past three months.

Its product data analysis revealed the cost of a 60% and 70% two-year tracker BTL mortgage is now 2% more than it was three months ago. Meanwhile, a 60% loan-to-value (LTV) two-year fixed (at a current rate of 1.84%) now costs 1% more than it did in August.

However, a two and five-year fixed (80% and 60% LTV respectively) have remained stable over the past three months with BTL mortgage costs still static when compared to three months ago.

With a current rate of 2.09% and 2.44% respectively, the 2% cost increase for the 60% and 70% LTV two-year tracker mortgages equate to an annualised increase of £162 on a £150,000 mortgage.

There is some good news, however, with Mortgage Brain’s latest data showing that the costs of a 70% LTV two and three-year fixed, and an 80% LTV five-year fixed, have all come down by 2% over the past three months.

In financial terms, the 2% drop in the cost of these mortgages offers potential investors and BTL borrowers a potential saving of up to £144 over the past quarter, or £432 per annum when compared to this time last year.

The analysis also shows the true cost difference between BTL mortgages and mainstream residential products. The latest figures (as of November 1 2018) show that the cost of the 80% LTV five-year fixed BTL mortgage is 24% higher than the same product type for a residential mortgage.

Similarly, an 80% LTV two-year fixed BTL mortgage costs 20% more than its residential counterpart, while a 60% LTV two-year BTL tracker costs 12% more.

Mark Lofthouse, chief executive officer of Mortgage Brain, commented: “With little movement in mortgage costs in the BTL sector over the past three months our latest analysis shows that, while there isn’t too much to get excited about, there are still cost savings to be made with a number of BTL products offering favourable rates.”

“The BTL market remains unsettled though and although there are plenty of predictions for further fluctuations over the coming months, any changes to costs and rates are expected to be slow and marginal."