Landlords favour BTL variable
Landlords are taking advantage of historically low interest rates and choosing variable rate mortgages over fixed rates, figures from TBMC reveal.
In Q1 2012, 59% of Buy-to-let applications were for variable rate loans, up from 48% in Q4 2011.
The average loan size of buy-to-let loans increased to £153,443 from £132,705 in the final quarter of 2011.
The average loan to value of buy-to-let deals also increased from 53.41% to 66.31% over the same period of time.
Andy Young, chief executive of TBMC, added that despite enduring difficulties in the eurozone, product pricing in the buy-to-let market remained relatively stable during the first quarter of the year.
He said: "At TBMC, for mortgage offers processed during Q1 2012, the average fixed rate was 4.82% compared with 4.93% in Q4 2011. For variable rates, the average was 4.07% in Q1 compared with 4.04% in the previous quarter.
"This is encouraging for buy-to-let investors and reflects the resilience of the buy-to-let mortgage market and increased competition amongst lenders, helping to keep product pricing down.
"Of course additional lender fees will affect the overall cost of borrowing but low initial rates can be an attractive feature for landlords."
On the swing away from fixed rate buy-to-let deals, Young added that it indicated a growing confidence that interest rates were likely to remain low for some time to come.
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