The UK’s buy to let mortgage market has witnessed a surge in product
availability, reaching an all-time high, according to
Moneyfactscompare.co.uk.
This expansion coincides with a reduction in average two-year fixed rates
over the last six months.
The platform’s data reveals that there are 3,560 buy to let mortgage
products – both fixed and variable – marking a record high since November
2011.
Monthly analysis identifies increases of 92 five-year fixed deals and 114
two-year fixed deals.
While average fixed rates over both terms experienced a monthly rise, the
two-year fixed rate remains lower than the preceding year.
New BTL mortgage deal
Springall, a finance expert at Moneyfactscompare.co.uk, said: ”
Landlords searching for a new deal
will find the choice of buy to let mortgages has hit a record high, which
could instil a sense of optimism.
“Views are mixed on how the buy to let market will fare this year, but
lenders are clearly working hard to attract new business, such as those
launching new deals at higher loan-to-value ratios and even deals created
for a limited company.”
She added: “Diving into the overall choice of buy to let mortgages shows
there are still more deals with a fixed term of five years, versus two
years, and both counts are at record highs.
“Five-year fixed buy to let mortgages have been in more abundance than
their two-year counterparts since June 2020.”
Loan-to-value options
For landlords with limited deposits or equity, 80% loan-to-value options
have also achieved a record high, with 417 choices available, more than
double the volume from 2023.
Ms Springall says this is ‘good news for those coming off a two-year fixed
deal this year’.
She adds: “However, the downside of the past few years has been volatile
interest rates; thankfully, compared to 2023, buy to let mortgage rates are
lower, across two- and five-year fixed terms.
“However, if someone locked into a cheap deal back in 2020, they will be in
for a shock this year when they come to refinance.
“Landlords will hope rates come down this year, but sticky inflation can
delay further base rate cuts, and the swap rate market remains
unpredictable.”
Impacting landlord profitability
Despite strong tenant demand, factors like reduced tax relief and Energy
Performance Certificate (EPC) upgrading costs are impacting landlord
profitability.
Ms Springall said: “Affordable housing remains in short supply, so demand
for rental properties continues.
“However, rising costs are taking their toll on prospective landlords.”
She points to a recent study from Hamptons which revealed that landlords
making home purchases fell below double digits to 9.6% of house sales in
January – a record low since records began in 2009.
Ms Springall continued: “The margin of profit from rental income may well
be tighter than in previous years, due to several factors, including the
cull of mortgage tax relief and the expense to cover EPC requirements.
“Property is still regarded as a safe long-term investment, but both new
and existing landlords would be wise to seek advice to assess
the latest deals available to them
and if it’s still viable to retain their portfolio.”
‘Golden opportunity for student landlords’
The managing director of Accommodation for Students, Simon Thompson, said:
“It looks like the UK’s BTL mortgage market is booming with a record number
of deals available.
“With so many buy to let deals, this could be a golden opportunity for
student landlords to secure financing that suits their needs, whether
they’re expanding their portfolios or refinancing existing properties.”
He added: “However, student landlords need to be aware of rising costs and
tighter margins which means careful planning is key.
“Profitability hinges on picking the right mortgage and managing expenses
like EPC upgrades so expert BTL mortgage advice will be crucial to navigate
this record-high market.”
