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Buy to Let Mortgages Interest Rates Affect of Funding for Lending Scheme
Landlord and property investors consider the UK government’s ‘Funding for Lending Scheme’ [FLS] starts to filter through to provide more affordable mortgage lending by dropping their interest rates across the range of mortgages including BTL.
The lettings industry has grown significantly over the last five years due to what is often dubbed ‘the perfect storm’ for landlords and buy to let investors. Constricted mortgage lending available for first time buyers, continued upward pressure on housing, increasing average rents, historically low interest rates and falling house prices have all contributed to create very favourable conditions for landlords and property investors.
Many landlords are also taking advantage of the stagnant housing market to expand their property portfolio by releasing equity from existing housing stock to fund new purchases, which is also likely to help lower the landlords’ tax bill!
From a landlord’s point of view, FLS has enabled banks to drop their interest rates across the range of mortgages they offer – including many buy to let mortgages. This is a direct and expected result of the scheme, which is good news for landlords.
“Since the FLS was launched in August, fixed buy-to-let rates have been falling. The average rate across the top ten lowest rates for two-year fixed deals is 3.35 per cent compared to 3.69 per cent a year ago.”
Rachel Springall, financial expert at Moneyfacts, says the average buy-to-let fixed rate is one of the lowest it has recorded since June 2007.
Kevin Gibson from Ascot Mortgages says “Now is a good time for landlords to look at remortgaging their buy to let properties (http://www.ascotmortgages.co.uk/
Mortgage lenders have however started to offer “penalty free” buy to let mortgages due to increased demand from landlords to have better flexibility with their mortgage accounts (as a 4% early repayment charge on a 100k mortgage is £4,000, a charge which is simply not financial viable for many landlords).
What about you? Are you looking to invest in any of the new properties to remortgage the property and enjoy more benefits of a buy to let mortgage with no redemption penalties or early repayment charges (http://www.ascotmortgages.co.uk/