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Thinking caps

It was great to see BM Solutions launch a capped range of buy-to-let rates. To the best of my knowledge, it is the first major lender to offer this range of products for landlords.

There are four tracker rates offering different options for fees, term and pay rates. The first is a two-year tracker at 4.74 per cent (base less 0.76 per cent). This is capped at 5.49 per cent and has a 2.5 per cent fee. There is a second two-year rate at 5.74 per cent (base less 0.01 per cent) capped at 6.49 per cent with a £799 fee.

There are also a pair of three-year capped rates. One is at 5.24 per cent (base less 0.26 per cent) capped at 5.99 per cent with a 2.5 per cent arrangement fee while the other is at 6.04 per cent (base plus 0.54 per cent) with a £799 fee and capped at 6.79 per cent.

Admittedly, for the cap to kick in, the base rate is going to have to rise by 0.75 per cent or so, which most experts seem to think is unlikely but we do not know what is round the corner. If you had said 10 months ago that base rate would be 1 per cent higher, I would have been amazed.

These rates compare very favourably with the rest of BM’s BTL range so landlords do not seem to be charged too much for the protection that the cap gives. Many analysts predict the base rate will start to come down once inflation has been tamed so these rates will allow landlords to benefit from future falls and give protection against rises.

Jonathan Cornell is a director at Hamptons International Mortgages.

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