The flat fees for buy to let mortgages are now lower than they have been at any point in the past twelve months, according to the latest edition of the Buy to Let Mortgage Costs Index, published by Mortgages for Business.
The average flat fee among buy to let mortgage products fell by more than 5% in Q2, down to £1,370 from £1,446 in Q1. This will be welcome news to landlords favouring these fee structures, who stand to save an average of £76 in fees on every mortgage they take.
However, percentage based fees are becoming increasingly common with lenders, likely as a way to keep interest rates low while still allowing profits to scale with larger loans. Percentage based fees now apply to 48% of buy to let mortgage products, having overtaken flat fees on product availability at the start of the year. These products have increased in number in every quarter since Q2 2016.
Commenting on the results, Steve Olejnik, COO of Mortgages for Business said:
"With interest rates still at exceptional lows, it's all the more important to make sure you look at any additional charges when taking a buy to let mortgage. It is therefore promising to see a reduction in the average flat fee charged for mortgage products."
With percentage fees becoming more common and no change in the prevalence of flat fees, it is only natural that we have seen a reduction in the availability of fee-free options. Just 11% of buy to let mortgage products carried no arrangement fees in Q2, down from 15% in Q1.
The index can be found here.