Holiday let mortgages bounce back to pre-pandemic availability

With continued uncertainty around foreign travel, the UK-based holiday market is set to boom this summer and with new research showing that holiday let mortgage deals have bounced back to almost the same as what was available pre-pandemic, now could be a good time to invest in a holiday let.

Research carried out by Moneyfactscompare.co.uk has found that there are currently 149 holiday let deals available on the market, which is just 13 less than was available at the beginning of March 2020, before the first lockdown, when there were 162 holiday let deals. As well as this, the number of lenders offering a holiday let mortgage has increased slightly, up from 20 at the beginning of March 2020, to 21 today.

Saying this, the average rate available on a holiday rate has risen over the last year to 3.95% today, up from an average rate of 3.37% at the start of March 2020. For those considering investing in a holiday let, it could be worthwhile speaking to a mortgage broker who may be able to highlight deals offering below average rates.

Commenting on the holiday let mortgage research, Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “There are now more lenders offering options than six months ago – back to a spread seen in March 2020 before lockdown began – but it appears that building societies are more inclined to provide deals to meet growing demand, whether for someone who uses their own home or takes out a new loan to fund the holiday let investment. According to a recent survey by Hodge Bank, out of those purchasing a holiday home, 65% take out a new holiday let specific mortgage and 35% remortgage their existing home to finance their holiday home.

“Supply and demand may well be a key issue in 2021 for investors who feel staycations are here to stay awhile yet, and indeed according to Rightmove, national new listings stock is down 25% year-on-year. Any lack of holiday home opportunities will come as frustrating news for investors considering the return of holiday let deals on to the market, especially as sales figures nationally are rising and some consumers have more disposable income from lockdown and are therefore ready to invest. Data from PropertyMark cited that one in nine properties nationally sell more than the asking price, with recent figures hitting a five-year high.

“Clearly, for any opportunities that prospective borrowers are contemplating, it is wise they approach an independent qualified financial adviser to go through the deals currently available and to get some valuable insight into the workings of a holiday let, including tax benefits, rules regarding residency periods, rental income desirability and requirements, and other potential expenses outside of utility bills.”