Pink Home Loans new fixed rate mortgage is latching on to the buy-to-let market.
Funded by Mortgage Express, the mortgage has a fixed rate of 3.75 per cent for loans of up to 80 per cent of valuation until December 3, 2002. After this date the rate will be 1.75 per cent above the Bank of England base rate for the remaining term of the loan.
There is no limit to the number of properties that can be purchased, but the maximum amount that can be borrowed is £1m. Self-employed applicants must provide two years accounts and three years banking records.
If the mortgage is redeemed before December 3, 2006 the borrower must pay a fee of six months interest. There is also a 1 per cent arrangement fee.
The Pink Home Loans product has the joint lowest interest rate of the only four one-year fixed rate buy-to-let mortgages with extended redemption penalties on the market, according to Business Moneyfacts on October 12, 2001. Its main rival is the fixed rate buy-to-let mortgage from The Mortgage Operation, which is also funded by Mortgage Express and the terms offered by the Mortgage Operation are identical.
The other two mortgages in the market are both from Capital Home Loans and have rates of 5.99 per cent and 6.49 per cent respectively.
It is still unclear if Bank of England base rates have hit their lowest following the economic uncertainty after the destruction of the World Trade Centre. When rates are low then fixed rate mortgages tend to be popular and as at the moment product providers can get good funding from the money markets. If interest rates start to rise again then the number of fixed rate mortgages will fall as discounted mortgages become more popular.