So, with rates already at an all-time low, how can lenders compete for business in this increasingly competitive market without reducing their pricing any further?
Well, of course there is no one simple answer and the best way to sway the minds of property investors is down to a matter of opinion. However, it appears it is fees that have come under the spotlight in recent months…
According to the findings from our latest Buy to Let Costs Index - published at the end of October, fee free buy to let mortgages are on the rise.
The research shows that 17% of products in Q3 2015 were offered without a lender arrangement fee, up from 13% in the previous quarter.
On average the total fees involved with a buy to let mortgage now only add an additional 0.48% to the headline rate, down from 0.52% in the previous quarter, and down from 0.67% in Q1 2013 when the index was first launched.
Both specialist and mainstream buy to let lenders are introducing product ranges with no arrangement fee and to the delight of many investors these are no longer just for the lower loan to value products.
In fact, Mortgage Trust is now offering rates to 80% loan to value with no lender arrangement fee and wait for it… some of these rates come with free legals and a free valuation too!
Of course, if you want the cheaper rates, as always you have to stump up a larger deposit, with really competitive rates coming in at around the 60% - 70% loan to value mark.
It’s not only individual applicants who can benefit from these fee free products either, as a handful of lenders are now offering buy to let mortgages with no arrangement fee to limited company applicants.
It is comforting to see that lenders are moving with the wants and needs of property investors; as I have said in my previous articles we have seen a marked increase in the number of limited company enquiries since the buy to let “bombshell” within the Chancellor’s Summer Budget and this is only set to continue.
So, is a reduction in fees really what property investors want? Well, twice yearly we run a survey to find out just that.
In November 2014 12% of respondents felt that lenders’ fees should be lower, so after the introduction of so many rates without lender arrangement fees it will be interesting to see the results of this a year on.
This autumn our Property Investor Survey will be running for two weeks during the month of November, with results published soon after. Do make sure you keep checking our website for the latest results.
And last but by no means least, my pick of the best buy to let rates where I have followed the theme of this article and gone for those without any arrangement fees. I have selected rates for both limited company and individual applicants to showcase the variety on offer.
Remember, there is no such thing as a “free lunch” – flat or nil fees invariably mean a higher interest rate – and for some landlords there is a bigger focus on “pay rate”.
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12th November 2015