Swap rates rose strongly in the fourth quarter of 2016 but so far the cost hasn’t been passed on to buy-to-let rates, Mortgages for Business’ Buy to Let Mortgage Costs Index found.
Buy-to-let rates will rise in 2017 as increased swap rates are eventually passed on to landlords, Mortgages for Business chief executive David Whittaker has predicted.
Swap rates rose strongly in the fourth quarter of 2016 but so far the cost hasn’t been passed on to buy-to-let rates, Mortgages for Business’ Buy to Let Mortgage Costs Index found.
David Whittaker (pictured), chief executive of Mortgages for Business, said: “With demand in the buy-to-let sector already under pressure from both fiscal and regulatory changes it is good to see that lenders have not further burdened landlords by increasing interest rates.
“However, with rising swap rates this situation cannot continue forever and we would expect to see increases at some point in 2017 as lenders factor in the additional time spent on deeper background checks and assessing affordability, particularly from landlords borrowing in a limited company capacity.
“Whether increases happen before 1 October when lenders will be obliged to be extra vigilant while assessing applications from portfolio landlords remains to be seen, but we will be watching the market closely in this respect.”
Products with flat fees saw their average price drop to £1,397 in the fourth quarter of 2016, down from £1,556 at the beginning of 2016.
Low LTV trackers up to 65% are expensive at 5.17%, not far off from high LTV trackers at 5.35%.
