Number of BTL products continues to grow in Q1

In Q1 2015 there was an average of 839 buy to let mortgage products from 31 active lenders on the market, up 21 products on the previous quarter.  Whilst the rate of growth in the number of buy to let products has reduced, and indeed withdrawals of products frequently lead to short term (< a week) drops in the numbers, there is no doubt that the trend is still upwards.  

This quarter has seen the launch of Foundation Home Loans and State Bank of India and products from these two lenders account for all of the increase in product numbers in the quarter.

There has been growth in product numbers across all loan to value bands and in product numbers by type and term.
 
It is notable however that the fastest growing segments are the 5 year fixed rate mortgage and the life of loan term tracker.

Last quarter the report commented on the phenomenon that fixed rate mortgages are generally being offered at lower rates than their equivalent tracker products.

This quarter's Index noted:

"If anything this has become more pronounced in Q1 2015 as tracker products have generally drifted higher in price (except at high LTV) whereas fixed rate products have remained at much the same price (again excepting high LTV which has also drifted down).  2 year fixed rate mortgages are now around ½ % cheaper than trackers (more at low LTV – less at high LTV) and both 3 and 5 year fixed rate mortgages are similarly priced to trackers."

"It continues to be our opinion that fixed rate mortgages at two, three and five years are offering considerably better value than trackers.  

"The spread in cost between low LTV mortgages and high LTV mortgages has stabilised at around 1.5% - 2 % compared with around 1% in early 2013 – so lenders are clearly keen to attract low LTV business."

The index also shows the absolute numbers of products available in each category are still rising – but growth in the number of five year fixed rate products has been particularly marked.

There has been only minimal change in the effect of costs of raising a mortgage in the quarter – with just a small reversal of the increasing charges on high LTV mortgages.

The proportion of products with no fee attached has held at the record level established in Q4 2014 but there has been a modest increase in the proportion of percentage based fee products at the expense of flat fee products.

The average flat fee now stands at £1,477 up from £1,422 in Q4 2014.