Buy-to-let mortgage rates lower than residential for the first time

Buy-to-let mortgage rates lower than residential for the first time

Typically, a buy-to-let mortgage for landlords is more expensive than a residential mortgage because lenders believe there is a greater risk when properties are rented out compared to being occupied by the owner.

But is all this about to change?

Earlier this month, the Leeds Building Society offered a buy-to-let mortgage rate that is actually lower than its cheapest residential deals. So, could this be the start of a buy-to-let mortgage price war?

The issues facing landlords have been well documented so to lure them in, lenders are cutting rates. Of course, there are some caveats with these low rates. For example, the 1.14% two-year variable rate that the Leeds Building Society is offering to landlords is subject to a £2,499 fee and a 40% deposit. Nevertheless, this is the first time that a lender has introduced a buy-to-let rate that undercuts every residential mortgage currently on the market.

Commenting on the rates, Aaron Strutt, a mortgage broker with Trinity Financial, said: “It is highly unusual for buy-to-let rates to match or even undercut the lowest residential mortgages and it shows how hard the lenders are pushing to tempt landlords to buy properties or refinance.”

It will be interesting to see if other lenders follow suit…