Buy to let lenders cut rates amid declining inflation

Specialist buy to let lenders including Landbay have reduced their rates across 2 and 5 year fixed deals.

These cuts come as inflation fell further than expected in June, declining by 0.8 percentage points, standing now at 7.9 percent.

For buy to let lender Landbay, the following cuts have been made to their product range:

• Their like-for-like remortgage for 2-year fixed have been cut by 0.4 percentage points, now at 4.39 percent, with 75 percent loan-to-value, with a 7 percent product fee.
• Standard 2-year fixed rate was cut by 0.3 percentage points, now at 5.49 percent with 75 percent loan-to value, and a 5 percent product fee.

Business development director at Landbay, Rob Stanton, has said:

With swaps rates reducing we are glad to be able to pass on rate reductions as quickly as possible. This will be welcome news for intermediaries and their landlord clients and covers all of our fixed rate deals.

We have been able to reduce the rates on so many of our products at the same time due to our highly functional broker portal which we built in-house last year. Our expert IT team and technology means we are able to make changes quickly and efficiently.

In order to allow for greater borrowing, some lenders are adding a higher fee but reducing their interest rate. This makes affordability calculations more flexible, but still protects the lender from the currently still high cost of borrowing to them – which you will see in the Landbay offering.

There are other cuts being made across a range of lenders, amongst them a major mainstream lender and other high street buy to let names. But, some have still not placed themselves into the most competitive positions alongside other deals already available on the market.

This is likely to be because lender costs have not come down by enough, as yet, to allow them to drop by too much.

Navigating rates and products remains tricky, which is where a broker can truly show their worth.

Jordan Abbs, chief executive of specialist mortgage broker Commercial Trust has said:

Lenders cutting rates will be doing so because of one or both of two reasons.

Firstly, the projections for the Base Rate are changing rapidly and frequently. Previous signals from economists had been that inflation would continue to be stubborn and the Base Rate could go up to around 7%.  Lenders built that expectation into their pricing.

However, those more extreme Base Rate warnings have softened a little, with inflation responding positively to the base rate hikes. It now appears the worst-case scenario is less likely to happen, and so lenders have the freedom to lower their rates and drive new business enquiries instead.

Let’s not forget, we are well over half way through the year now and loan books have to be filled, so where lenders can increase business volumes it is likely to serve them well to do so, given the harder climate at the start of the year.

Then secondly, the other reason lenders are cutting rates is to support those who want to maximise borrowing, but they are also taking measures to protect their own costs. By cutting a product’s rate and instead taking income from a higher product fee, affordability calculations become more flexible. Borrowers have the option to add the product fee to the loan, so it doesn’t become an upfront cost.

There is a huge amount of complexity in the buy to let borrowing space at the moment, so as a broker we are here to help clients find the best outcome possible.

Commercial Trust is a specialist mortgage brokerage, with access to over 80 lenders nationally. Leveraging our database of lenders, and with our expertise, we work with our clients to secure them a deal that best fits their particular situation, as well as making sure the rate we secure for them is competitive.