Buy-to-let product choice improves to seven-month high

There are currently 2,400 buy-to-let mortgages on the market, meaning choice has returned to a level not seen since August 2022.

Data from Moneyfacts showed that this was up from the 2,375 buy-to-let mortgages that were on the market last August, the month before the mini Budget saw options pulled off the shelves. 

The options for landlord borrowers in March are also better than in February when there were 2,246 buy-to-let mortgages available. 

The level of buy-to-let mortgages available this month is the highest since July last year which had 2,746 options. Moneyfacts said this was an “encouraging sign of recovery”. 

There are more five-year fixes on the market than two year-fixes with 914 five-year options compared to 632 two-year products.  

There are also more higher loan to value (LTV) options. For landlords with a 40 per cent deposit and requiring a mortgage at 60 per cent LTV, there are 95 two-year fixes and 107 five-year fixes. At 75 per cent LTV, there are 313 two-year fixed choices and 436 five-year fixed options. 

Average rates for buy-to-let mortgages have reduced and now stand at 5.81 per cent for a two-year fix and 5.72 per cent for a five-year fix. These are compared to respective average rates of 5.95 per cent and 5.85 per cent in February. 

There is still a gap between average rates on last year. In March 2022, the average two-year fixed rate stood at 3.05 per cent while the average five-year fixed rate was 3.29 per cent. Meanwhile, in 2021, the corresponding average rates sat at 3.08 per cent and 3.41 per cent. 

This means any landlords refinancing this year may face a two per cent increase to their mortgage rate. 

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “It is encouraging to see buy-to-let product choice gradually recover from the shock surrounding the fiscal announcement.  

“The drop in average buy-to-let rates appear more subdued than seen within the residential mortgage sector, but lenders have made moves to entice new business despite some investors’ concerns surrounding rental income margins.” 

Springall said landlords were “likely to see their monthly repayments much higher than they perhaps anticipated”.  

She added: There may even be those looking to sell up this year because of the rise in interest rates, tax changes for holiday lets and capital gains tax (CGT) or even energy performance certificate (EPC) requirements – all of which dampen profit margins or investment returns on sale of a property. 

“Landlords may be waiting for fixed mortgage rates to come down further or indeed opt for a tracker mortgage to give them more flexibility to eventually switch their deal. However, interest rates are only part of the decision-making process when entering a buy-to-let investment.” 

For any Buy To Let Mortgage information contact Asset Harbour on 01276 986333

(Original Article by Mortgage Solutions)