Defaqto data shows that average rates for 2, 3 and 5 year fixed rate and 2 year base rate tracker buy-to-let mortgages at 75% loan-to-value have dropped markedly since September 2010, and that average arrangement fees have also fallen for several types of buy to let mortgage
The average 2-year fixed rate buy-to-let mortgage at 75% loan to value was priced at 5.78% with a £2,492 arrangement fee at September 2010. In Sept 2011 the rate was 4.86% with a £2,603 fee.
The average 3-year fixed rate at 75% LTV was 6.03% in September 2010 with a £2,859 arrangement fee; and 5.56% and £2,559 this year in September.
Five-year fixed rate prices also fell from 5.94% and £2,122 last year to 5.69% and £1,956 this year.
At the same time, Defaqto analysis shows that average interest rates and arrangement fees in the buy-to-let mortgage market remain significantly higher than for their equivalent residential mortgages.
For example, the average rate for a regular 2 year fixed rate mortgage is currently 3.52% with an average arrangement fee of £844. For a 5 year fixed rate mortgage the respective figures are 4.25% and £727.
David Black, Defaqto’s insight analyst for banking, said: “For those looking to get into the buy-to-let market the last year has seen some positive developments. While interest rates and arrangement fees have reduced we have also seen a number of new lenders enter the market as well as existing lenders expanding their product ranges.
“People should factor mortgage fees into their calculations as, like the interest rate, they tend to be much higher for buy-to-let mortgages than for residential mortgages, and can make a real difference to the overall cost of the mortgage.
“Many borrowers will want to use the expertise of an adviser to help choose the best buy-to-let mortgage for their circumstances.”
