Buy to let mortgage rate rises expected
Andrew Turner, chief executive, at specialist buy-to-let broker Commercial Trust Limited, urges landlords to take advantage of current low rate deals, whilst they are still available.
A quick look at our buy to let mortgage comparison table reveals some historically low rates for both tracker and fixed rate buy-to-let mortgage products.
This has been the case for some time and is reflective of a hugely competitive market place, where lenders are trying to outdo one another with enticing mortgage deals, encompassing low rates, low fees, or incentives such as cash-back or free valuations.
With over 2,000 products in the buy-to-let marketplace it is clear that there is a myriad of choice for investors. This volume of choice brings with it complexity, where the lowest rate does not necessarily equate to the cheapest overall deal.
Rates are low now, but this may about to change
Mortgage interest rates are commonly influenced by fluctuations in the base rate, because the base rate impacts the cost of mortgage lending.
The Bank of England’s Monetary Policy Committee (MPC) have implemented two base rate rises in the last 12 months, yet the added cost to lenders has not shown itself in any significant way in the deals they are offering.
In my view this will have to change.
The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and in any event, there is not too much scope for reduction. My view is that the overall picture for the next decade is a gradual upward trend in rates.
UK Finance buy-to-let data shows strength in remortgaging, whilst the changes in buy to let have tempered purchases somewhat.
In November, their statistics indicated that buy-to-let remortgaging activity in 2018 would exceed its forecasts by approximately £3bn, while a similar figure would represent a shortfall in its forecasts for buy-to-let purchase business in the year.
It can be no coincidence that there has been a surge in landlord activity around buy to let remortgages, with such uncertainty affecting their businesses.
For this reason, if you are concerned that rates are set to trend upwards, fixing now at a competitive low rate and for a period suited to you, could bring you a great deal of security through turbulent times.
