93% of landlords choosing fixed rates
The latest Buy to Let Mortgage Index from Mortgages for Business shows that between April and June, 93% of landlords chose a fixed rate mortgage. This illustrates the importance of security to landlords in the current climate, with fixing for five years being particularly popular.
Specifically, 69% of landlords chose a five-year fixed rate buy-to-let mortgage. Luckily for them, the average five-year fixed rate had remained static compared to the first three months of the year, at a rate of 3.52% according to Mortgages for Business' data.
Those that don't want to commit for such a long time are still in luck, rate-wise, as the average two-year fixed buy-to-let rate has also remained static at 3.01%. At the same time, the average three-year rate has actually reduced by 0.04% to 3.30% quarter-on-quarter.
And that's not the only good news, as the percentage of lenders that are offering fee-free products has increased slightly, from 19% in the first quarter of 2018 to 20% in the second quarter. This echoes the increased percentage of fee-free mortgages in the regular mortgage market, as reported earlier this week.
As always, landlords and prospective landlords will have to do the maths for themselves to figure out whether a fee-free buy-to-let deal is truly the best investment, compared to mortgages that may have a fee but also a lower rate. To complicate matters, the average flat free has decreased to £1,389, back to where it was in the third quarter of 2017, which could make it that much harder to see which product offers the best overall value.
To make it a bit easier to decide, our buy-to-let charts incorporate the annual percentage rate of charge (APRC), which takes into account fees as well as the rates involved. Landlords looking to buy another property or remortgage could therefore find what they're looking for simply by going to the relevant chart and seeing which product has the lowest APRC at the right loan-to-value for them.