by Mark Johnston
Buy To Let Fees Remain High.
It appears that the market is skewed towards landlords at the moment as first time buyers are still struggling to get on the property ladder, therefore meaning that more people are being forced to continue as tenants, dubbed by some as ‘generation rent’.
According to the latest Census figures, the proportion of British households renting has increased in the past decade from 31 per cent to 36 per cent.
Also according to LSL Property Services the average monthly rental price has risen from £660 to £734 in three years.
Buy to let lenders continue to cut their lending rates as these particular lenders increasingly see landlords as a good credit risk compared to other potential borrowers as demand for rental property continues to outstrip supply and rents rise.
Andy Young at Property Hawk Mortgages, said “The buy to let mortgage market in the UK has expanded considerably over the last two years with more lenders and products available for landlords to choose from. Inevitably, with an increase in the number of lenders in the market there will be more competition”.
According to comparison website Moneyfacts, just one year ago rates were 5.04 per cent and three years ago they were around 5.77 per cent.
In recent months due in part to the funding for lending scheme buy to let mortgage rates have fallen with the average buy to let fixed mortgage rate now at around 4.69 per cent.
However this all said as with regular residential mortgages fees remain relatively high.
Current statistics reveal that fees are higher than back in 2008, the average fee in 2008 was 0.47 per cent, 0.10 points lower than today’s figure and for two year deals 0.75 per cent, again ten points lower than today’s figure.
David Whittaker, managing director of Mortgages for Business said: “Lender arrangement fees vary enormously. Some products carry a flat fee but most have percentage fees which can be in excess of three per cent. This can make headline rates extremely misleading”.
Buy-to-let landlords have been warned to watch out for big fees that substantially bump up the cost of best buy mortgages – with some able to push up the effective rate of a two-year fix by more than 2 per cent.
The Mortgage Works, the Nationwide’s landlord lending arm, currently offers the ‘lowest’ buy to let rate at 2.74 per cent fixed for two years. However, this comes with a substantial 3.5 per cent arrangement fee.
Therefore on a £200,000 property, this would represent an eye watering £7,000 charge.
Five of the best paying buy to let lenders have ruled out cuts to their product fees.
An Abbey for Intermediaries spokeswoman says: “We are committed to supporting the market and we are not planning any changes to our product fees at this time.”
Paragon Mortgages and Mortgage Trust managing director John Heron also added “We will keep market developments under review but we have certainly got no plans to cut product fees at present.”
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