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BTL mortgage market shows signs of recovery
Derin Clark

Derin Clark

Online Reporter
Published: 07/07/2020

Landlords looking for a remortgage deal and investors considering a buy-to-let (BTL) property will be pleased to see that the BTL mortgage market seems to be showing the first signs of recovery.

Indeed, research carried out by Moneyfacts.co.uk has found that since May, the number of BTL deals (fixed and variable) available at all loan-to-values (LTVs) has increased by 283, with the number of two year fixed deals increasing by 134 and the number of five year fixed deals increasing by 164. Saying this, while more competition has been entering the BTL market over the last two months, since May, the average rates on both two and five year fixed rate deals at all LTVs have increased slightly, however this could be due to higher LTV deals returning to the market and therefore pushing up the average rate.

 

2020 BTL mortgage product number analysis
  January March April May July
BTL product count - fixed and variable rates 2,583 2,897 1,887 1,455 1,738
Two-year fixed rates BTL - all LTVs 823 914 610 491 625
Five-year fixed rates BTL - all LTVs 879 1,000 695 480 644
2020 BTL average rates analysis
  January March April May July
BTL two-year fixed - all LTVs 2.82% 2.77% 2.71% 2.51% 2.61%
BTL five-year fixed - all LTVs 3.19% 3.24% 3.16% 2.94% 2.97%

 

"The mortgage market as a whole remains an evolving and complicated landscape, as the ongoing impact of the recent lockdown has affected product choice and rates,” said Eleanor Williams, finance expert at Moneyfacts.co.uk. “However, as our latest research shows, the buy-to-let sector has adapted well and there are indications that landlords may have cause for positivity."

In fact, with rates as low as 1.19% available in the BTL chart today, it seems that there are some highly competitive deals available to landlords. Saying this, the BTL mortgage market has not seen a harmonious return to pre-lockdown competition and landlords looking for a 60% LTV will have seen average rates rise since the beginning of the year, while 80% LTV rates have fallen.

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Stamp duty could be removed on properties up to £500,000

It is reported that the Chancellor of the Exchequer, Rishi Sunak will announce this week changes to the levels of stamp duty paid on property in England. The announcement is expected to remove stamp duty on properties up to a value of £500,000 for between six months to one year. First-time buyers already enjoy stamp duty relief and do not need to pay stamp duty on their first property purchase up to £300,000 (£500,000 in London).


This new reduction aims to get the people of England moving again, following three months of house market stagnation due to the Coronavirus lockdown. However, factors such as a lack of mortgages at higher loan-to-values (LTV) and a backlog of valuations also need to improve to help unlock the housing market.
It is not yet clear if those purchasing a holiday let or a buy-to-let property will also receive a reduction in stamp duty. Currently, property landlords pay stamp duty on properties from £40,000 plus an additional 3% on each stamp duty tax band. A further saving on stamp duty could help those savers considering buy-to-let, due to it potentially generating better returns than the historically low rates currently available on standard savings accounts.

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An interest-only mortgage could help ease financial pressure during pandemic

Mortgage borrowers financially struggling due to the Coronavirus pandemic and considering switching to an interest-only mortgage will find that the majority of deals offer an interest-only repayment option.

Research carried out by Moneyfacts.co.uk found that currently, 61% of all mortgage deals have an interest-only option, an increase from 48% in March 2020. In addition to this, the percentage of all deals offering a pure interest-only product has increased from 2% in March to 3% in July.

 

Mortgage market analysis
  Pure interest-only products Total number of residential mortgage products Number of products available with an interest-only option
March 2020 118 (2% of all deals) 5,231 2,533 (48% of all deals)
July 2020 77 (3% of all deals) 2,728 1,666 (61% of all deals)

Product counts exclude Standard Variable Rate mortgages, pure interest-only figures also exclude RIOs

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Overdraft interest rates set to rise – tips for paying off your overdrafts

At the start of the Coronavirus pandemic, the majority of banks put on hold their planned overdraft interest rate rises to help consumers struggling financially due to the pandemic, but now many banks are set to go ahead and increase their rates.

The banks that are due to increase their fees during July and August are Barclays, first direct, HSBC, NatWest, Royal Bank of Scotland (RBS) and Starling, with Santander also due to raise fees in the future.

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Is a holiday let a good investment to top up your pension?

As more of us are expected to holiday in the UK this Summer and potentially into 2021, those looking at options to improve the returns on their savings might consider a switch to managing a holiday let property.


Income tax-relief benefits are no longer available to landlords, meaning that income tax at the applicable rate is due on any profits generated from the property. However, the current low interest rates make the potential of greater actual returns possible from property more attractive and a holiday let can offer specific advantages for the retired when compared to a buy-to-let property.

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