Mortgage News

Prospective landlords or those with a buy-to-let (BTL) mortgage set to mature this year may be interested to see our latest data, which highlights sustained levels of product availability in the sector, but warns that interest rates are rising.

There was a small month-on-month dip in the number of products available to landlords, reducing by 61 to leave 3,374 deals on offer at the start of May. Compared to this time last year though, there are over 1,000 more BTL products available now (May 2021 – 2,302), and availability remains notably above that recorded pre-pandemic (March 2020 – 2,897).

Rising for a third consecutive month to 3.41%, the average overall two-year fixed BTL rate is at the highest level recorded since September 2015 (3.41%). This is 0.51% above where this rate stood at the start of December 2021 (2.90%), prior to any of the four recent base rate increases.

Meanwhile, the average overall five-year fixed rate has also increased for a third month in row and sits at 3.56%. This is the highest since March 2019 (3.58%) and represents a rise of 0.38% compared to December 2021 (3.18%). Landlords with a maturing five-year fixed rate from 2017 may therefore be able to secure a more competitive deal as this rate remains 0.12% lower than where it sat in May 2017 (3.68%).

Interestingly, for what is traditionally viewed as a higher-risk area of the sector, landlords will find the level of choice at 85% loan-to-value (LTV) of 79 products is only one deal fewer than the 80 recorded last month – which was the highest number recorded since May 2008 (104). Also, the average two- and five-year fixed rates for landlords with 15% deposits or equity are the only LTV bracket where rates are lower now (4.80% and 4.93%) than they were at the start of December 2021 (5.17% and 5.22%).

As the cost of living crisis continues to dominate headlines, data from the latest Moneyfacts UK Mortgage Trends Treasury Report shows that average mortgage rates continue to increase, with the average overall two-year fixed rate rising above 3% for the first time in over seven years.

Despite no base rate movement during April, we saw a 0.17% month-on-month increase in the two-year fixed rate average for all loan-to-values (LTVs) which has now risen for a seventh consecutive month. At 3.03% this is the highest on Moneyfacts’ records since March 2015 (3.06%) and has risen by 0.69% since December 2021.

At 3.17%, the overall five-year fixed rate increased for a seventh consecutive month, rising by 0.16% since last month and now the highest recorded since May 2016 (3.17%), having gone up by 0.53% since December 2021.

Moreover, the average two- and five-year fixed rates at 95% LTV have also risen month-on-month to 3.35% and 3.47% respectively. Not only are these average rates still lower than a year ago, but product availability in this sector has also continued to improve, rising by a further two deals this month to 369 – the most on offer since pre-pandemic in March 2020 (391).

The Bank of England has today increased base rate by 0.25%, up from 0.75% to 1.00%. We have analysed the average rates offered across savings and mortgages and considers what this decision may mean for consumers moving forward.

Nationwide’s study found 28% of respondents believed financing a deposit to be the biggest obstacle to homeownership.

Seven in ten potential first-time buyers, who were looking to purchase their property in the next 12 to 24 months, will now delay their plans due to the growing cost of living.

This is according to research released by Nationwide BS today, which surveyed more than 2,000 people who are looking to buy their first home within the next five years.

In addition to this, 28% of the survey’s respondents felt that saving for a deposit was the biggest obstacle to owning a home. In comparison, concerns over borrowing enough and keeping up with mortgage payments was the next biggest challenge for potential homeowners.

“Building a deposit remains the single biggest barrier to homeownership today, with many people starting out facing a long uphill battle to save. The rising cost of living has made this even harder,” said Paul Archer, Senior Mortgage Manager at Nationwide Building Society.