Much has been made of the vast number of incredibly low mortgage rates in recent times. Even though rates have edged up slightly in the last week or so, they still represent highly affordable deals when compared to rates that have been in place in the past.
This applies just as much to those looking for buy to let properties as it does to regular homeowners. Landlords are also enjoying cheaper mortgages and a wider choice to look through as well.
The best rates eclipse those available prior to the recession
Many landlords are taking advantage of deals that are far below the ones offered just prior to the financial crisis. Indeed, the best examples are often some 2% lower today than they were back then. A two year fixed deal currently offered by Mortgage Works has an interest rate of just 2.49%. Borrowers must be able to stump up a 40% deposit to take advantage of this, but it shows how low the rates have gone.
There are other deals around that offer interest rates of below 3% as well, so it makes sense to explore the market prior to committing. Buyers should watch out for the fees involved too, as higher fees on cheaper interest rate deals can result in them being more expensive than other deals in the long run.
The Post Office also re-enters the market
Three years ago buy to let mortgages were taken off the market by Post Office Mortgages. However they have now chosen to introduce them again. They will come via the Bank of Ireland UK, and landlords can opt for a two, three or five year fixed deal. Mortgages fixed for three years will not incur a fee but the ones fixed for two or five years incur a fee of £1,495*.
Would landlords be affected if the base rate were to increase?
We know from previous reports that the Governor of the Bank of England is not intending to raise the base rate in the immediate future. However it would be foolhardy to assume it is not likely to be raised in the near future, perhaps before the end of 2014.
This means landlords could see the interest rates on their mortgages rise just as private homeowners will. It also points to the need to opt for fixed rate deals to ensure they can lock in the best possible deal for the longest period of time.
The rental market has certainly shown its resilience in the face of challenging market conditions in recent times. While rents have been rising the degree of arrears seen on them has been falling – good news for landlords. Many people are also renting in cities, since the cost of ownership is too high to manage. It would seem there is no end to the booming rental market for the foreseeable future. This is good news for landlords – especially since there are such appealing buy to let mortgages available for them to choose from.
(* = Feb 2014)