We are delighted to report that mortgage rates are at their lowest ever levels and experts are predicting they will fall further. There are a number of factors pushing down mortgage deals of all kinds including economic uncertainty in the Eurozone to low interest rates at home.
In particular buy to let mortgage rates have plummeted to their lowest levels ever. Buy-to-let landlords take out a different type of mortgage to normal homeowners based on other factors than affordability criteria.
Lenders judge landlords on how much they will earn in rental income and whether that will be sufficient to repay the mortgage.
It means buy to let mortgages are an investment product and do not offer the same regulatory protections as residential mortgages.
The extra risk taken on by lenders relying on rental income and not the borrower’s income and expenditure means they charge a premium.
Buy to let deals will always be more expensive than residential and they will also be offered at lower loan to values.
Whereas the Government is keen to promote mortgages with a 5% deposit, there is no such market in buy to let where the maximum available deal will normally be 85% or 80%.
With mortgage rates at low levels the market is being turned on its head on many buy to let mortgages are falling to levels only seen by residential mortgages.
Meanwhile residential mortgages fall to new unthinkable lows with many predicting a two year fixed deals could be selling at under 1 % on a regular basis soon.
New research from statisticians Moneyfacts shows the average cost of both fixed and variable buy-to-let borrowing is falling.
The average fixed rate BTL is currently at the lowest level ever recorded across all terms. The number of deals in the BTL sector has also risen from 757 to 811 in just one month.
Experts say the market is “thriving” with an all-out rate war breaking out between mortgage lenders.
This time last year there were 2,662 deals for borrowers looking for loan to values ranging from 100% to 75%, but now the number has increased to 2,943.
The number of restrictive deals under 70% loan to value has fallen declining from 1,021 to 845.
And we are delighted to see the booming mortgage market moving beyond pure headline rates, more deals and lower loan to values.
Lenders are also making it easier to get deals after a year of tough new regulations coming into place restricting availability for many.
With the UK economy continuing to strengthen with low inflation and low interest rates combined with high employment, it is increasingly looking like the golden age of mortgages.
Rates are rock bottom and economic conditions are providing more job security and less chance of going into arrears.
As the biggest financial decision of your life, it is clear that many should take this chance to grab a new mortgage and save themselves a bundle.