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Buy to let mortgage rates fall

Monday, 10 October 2011 1:46 PM

Average interest rates for buy to let mortgages have fallen significantly in the last year, according to a survey by independent financial research company Defaqto.

However, landlords still face higher mortgage costs than ordinary homeowners.

The survey shows that rates and most arrangement fees have fallen for a range of buy-to-let mortgages including two, three and five year fixes and a two year base rate tracker.

A two year fix costs £2,603 (about £100 more) in arrangement fees than a year ago but the rate has fallen from 5.78 per cent to 4.86 per cent. Fees for other deals have gone down.

However, buy to let rates are still well above the rates and fees paid by an ordinary mortgage customer. The average rate for a two-year fix in the residential market is currently 3.52 per cent and the arrangement fee is just £844.

David Black, Defaqto's insight analyst for banking, said: "People should factor mortgage fees into their calculations as, like the interest rate, they tend to be much higher for buy to let mortgages than for residential mortgages, and can make a real difference to the overall cost of the mortgage."

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