New buy-to-let mortgages are still scarce — and are priced at 0.81% above the average residential fixed-rate deal, according to Defaqto, a data firm. The average deposit required on a buy-to-let has also risen from 18% to 29% in the past year.
However, landlords were given some hope last week when some of Britain’s biggest mortgage lenders quietly cut buy-to-let mortgage rates last week.
Cheltenham & Gloucester (C&G) cut rates on all fixed-rate mortgages for landlords by up to 0.60 points, taking a two-year deal to just 5.69%. They are also offering a 6.19% variable rate to 31.01.12 with a max LTV of 75%. BM Solutions, which was the biggest buy-to-let lender this year, also cut by up to 0.81%. Its two-year deal is also 5.69%.
The cuts are at odds with the suggestion from Richard Pym, Bradford & Bingley’s chairman, that the buy-to-let market is in effect closed, and suggest landlords who hang on will be able to remortgage at better rates.
The lowest rate on offer is a 4.69% fix from The Mortgage Works, owned by Nationwide, which is available to borrowers with a deposit of 30%. It carries a hefty fee of 3.5% — £7,000 on a £200,000 property — though the lender also offers a deal at 5.19% with a 2.5% fee.
Aaron Strutt of Chase de Vere Mortgage Management said: “Rates have come down as lenders pass on the drop in funding costs, and there are now several deals available at around 5.5%. Lenders are still cautious, but C&G’s decision to cut rates is a step in the right direction for the housing market.”
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