22nd
Jan 2017
During October through to December 2016, buy-to-let mortgage rates suffered little affect from a high increase in swap rates, however there is a stark warning that there is very little chance of this continuing in 2017 and landlords should be aware of this.
A leading business mortgage firm's BTL Mortgage Costs Index reveals that in Q4 of 2016 although there was a sudden rise in swap rates, buy-to-let was protected against any increases as the bank rate was at a record low of 0.24%.
However the chief executive of the company David Whittaker, predicts that lenders will have to increase their buy-to-let rates in the next few months, which will probably affect landlords the most who have taken on mortgages via the limited company route.
Whittaker 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 1st 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.”
In the last three months of 2016 there was a swing towards packages offering percentage-based fees with 41% of buy to let mortgages using them, 2% higher than Q3.
In Q4 16% of market share was taken by products that did not include fees, this was up by 14% from Q3.
Packages that offered a flat fee lost a fair amount of market share, however there are attempts to counter this by reducing their average fee which now stands at £1,397, whereas in Q1 2016 it was £1,556.
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