The cost of five-year fixed buy-to-let mortgages has resumed a downward trend as we enter 2020, according to new research from online mortgage broker, Property Master.
This was in line with the broker’s forecast in December that a decisive victory for the Conservative party would boost confidence in the sector.
Angus Stewart, Property Master’s chief executive, said: “We did detect the buy-to-let market, as with many other sectors, was holding its breath until the election was out of the way. Now with such a clear, decisive victory we would expect confidence to return and our latest research has shown that this is being seen in a fall in the cost of borrowing.
“Most of this downward pressure on mortgage rates is though from greater competition amongst lenders for good business. A lower Bank of England base rate – which may now be on the cards – would give lenders scope to cut more deeply.
“Balancing out the good news of lower borrowing costs though there is for 2020 a list of tax and regulatory changes that will hit landlord profits. The traditional tax relief on mortgage interest will finally be phased out in April 2020 whilst those landlords that are renting out their own home will find from this year, they will be subject to full Capital Gains Tax when they come to sell.
“Meanwhile landlords will have to ensure their properties meet Minimum Energy Efficiency Standards to a new level this year and the ban on tenancy fees will be extended to all existing tenancies. Any reduction in borrowing costs will therefore be very welcome indeed.”
Property Master’s January 2020 Mortgage Tracker shows the biggest month on month fall in cost was for five-year fixed rate buy-to-let mortgage offers for 50% of the value of a property. The monthly cost of a typical £150,000 mortgage for 50% of the value of the property fixed for five years fell by £15 per month December 2019 to January 2020. Five-year fixed rate offers for 65% of the value of this property fell month on month by £11. Five-year fixed rate offers for 75% of the value fell by £3 month on month.
Two-year fixed rate buy-to-let mortgage offers for 65% and for 75% of the value of a property fell by £3 per month each from December 2019 to January 2020. But the average monthly cost for two-year fixed rate buy-to-let mortgages for 50% of the value of a property remained the same.