Buy-to-let mortgage sector shows promise

by Sarah Ashcroft

The number of people expanding their property portfolio may soon rise, as buy-to-let mortgages have proved especially popular.

Although rates have fallen over the past year, Defaqto found that buy-to-let has outperformed the residential market.

"While interest rates and arrangement fees have reduced we have also seen a number of new lenders enter the market as well as existing lenders expanding their product ranges," said David Black, Defaqto's insight analyst for banking.

Statistics show that the average interest rate on a two-year fixed buy-to-let mortgage in September 2010 stood at 5.78 per cent, with a £2,492 arrangement fee.

In September this year, the interest rate was 4.86 per cent on this product, while the arrangement fee totalled £2,603.

For a five-year fixed rate mortgage, the average interest rate has declined from 5.01 per cent to 4.11 per cent over the past 12 months, Defaqto revealed.

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Published on: October 10, 2011

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