New research suggests that the recent fall in the cost of fixed rate buy-to-let mortgages may be coming to a halt.
Online mortgage broker Property Master says that interest rates in October have fallen in four of six major categories - but two have remained the same, for the first time in several months.
Property Master chief executive Angus Stewart says: “The previous quarter saw our report record two across the board falls in the cost of all the fixed rate buy-to-let mortgage categories we track. But as we go into the last quarter of this year, we have seen this decline stall – at least in the cost of two-year fixed rates.”
And he adds: “The further reduction in some five year fixed rates provides some landlords with an incentive to fix their commitments at what may be the lowest rate we will see for some time.”
Stewart believes that lenders have recently been awash with funds, allowing them to offer lower costs and drive fierce competition for customers. However, the approach of yet another Brexit deadline and the continuing economic uncertainty it brings has had an impact.
The Bank of England’s Monetary Policy Committee meets on November 7 to decide the future direction of interest rates, and Stewart says this will be “a critical review point.”
Property Master’s October Mortgage Tracker shows the biggest fall in monthly cost was for five-year fixed rate buy to let mortgage offers for 50 of the value of a property.
The monthly cost of this type of mortgage fell by £25 per month September to October.
Five-year fixed rates for 65 per cent of the value of a property fell month on month by £10. Five-year fixed rates for 75 per cent of the value fell by just £1.
Two-year fixed rates buy-to-let mortgage offers for 75 per cent of the value of a property fell by £4 per month.
But average interest rates stayed unchanged month on month for two-year fixed rate buy to let mortgages for 50 per cent and 65 per cent of the value of a property.
Property Master’s online service has attracted financial backing from a broad range of private investors including a minority stake being taken by LSL Property Services, whose estate and letting agency brands include Your Move and Reeds Rains.
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From very bitter experience with Comrade Harold all borrowers need to stress test their borrowings right up 12% interest and may be a bit further. Don't laugh at a silly old codger, just do it. It does seem as though British governance is at a crossing point and might go to good, indifferent or bad. High inflation will also have an effect where the value of money is dropping significantly every week. You can game this a bit by buying on credit providing your income is matched to inflation rates. In other words you never pay back the real cost of what you bought but you will need a spreadsheet to work it out. When I was first setting up home with my wife we rounded up any cash we could do without and bought something we needed. By the time the last payments were due they were small change, not a major outlay.
If the country goes 'bad' there is going to be a fine balance between buying investment properties to benefit numerically from inflation and avoiding property all together because of politically bad legislation. This second option was the norm behind the Iron Curtain.
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