26th
Mar 2017
Good news at last for the private rented sector in the wake of the government' anti-landlord stance, is that buy to let mortgage rates are at their lowest ever.
The new tougher borrowing measure laid by the Prudential Regulation Authority, reduction of the mortgage interest tax relief and the hike in stamp duty have really hit landlords and investors hard. However the latest figures from the Bank of England provides some cheer as they show that the average buy-to-let mortgage rate has dropped by over 0.5% in the last twelve months.
In February the average two-year fixed-rate buy to let mortgage offer fell down to 2.76% which is the lowest in the last twelve months, in January it stood at 2.82%. However this is not the only record low as 2.76% is the lowest rate since January 2012 when the Bank of England started to keep records. In February last year landlords were being made to pay an average of 3.29%.
Landlords have an alternative option if they decide to go for a longer term fixed offer. It seems that many lenders do not use the ‘rental income ratios’ for five-year or longer deals, this is because the PRA (Prudential Regulation Authority) regulations just requires lenders to calculate whether a landlord will be able to pay higher mortgage payments in the next five years. So therefore the rules do not apply to rates for mortgage applications which are for five years or taken for a longer term. The other plus for landlords is that more expensive fees are applied to two year mortgages.
Mortgage expert Steve Olejnik, regarding the new two year rates, said: "While these falls do not entirely mitigate the financial impact of the regulatory changes to the sector, they do provide some breathing room."
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