The latest edition of the Buy to Let Mortgage Costs Index, published by Mortgages for Business, has found that percentage-based arrangement fees have become the new standard among buy-to-let mortgage products.
Flat fees have long been popular as a way for lenders to maintain profitability, while still offering competitive rates, while other products instead carry a variable fee based on the loan amount.
But the latest data from the first quarter of this year reveals that 44% of all buy-to-let mortgage products now carry a percentage-based fee, overtaking flat fees (41%) for the first time since 2013.
The data also reveals that there was a rise in the average flat fee, up to £1,446 from £1,397 in fourth quarter of last year and together these changes have increased the average effect of mortgage charges to 0.64%. This compares to 0.62% in Q4 and is the strongest effect observed since the first half of 2015.
Steve Olejnik, COO of Mortgages for Business, said: “With the challenges lenders have faced to generate business in the face of successive blows to the buy-to-let sector, it is only natural that many have chosen to focus on cutting rates at the cost of increased fees.
“The recent trend towards percentage-based fees is an example of lenders doing exactly this, as fees of this type become more expensive for larger loans.”
We're excited to announce that we're working on building a shiny new website for readers of Landlord Today! As part of this process, commenting on articles will be temporarily disabled. We look forward to sharing our new and improved Landlord Today website with you shortly!
.png)
(1).png)
