Mortgage News

The percentage of deals available to first-time landlords in the buy-to-let (BTL) market has increased over the last 12 months, suggesting that, despite the economic uncertainty caused by the pandemic, many mortgage providers are still willing to lend to new property investors.

Research from Moneyfacts.co.uk has found that despite the number of BTL deals for first-time landlords falling year-on-year, the percentage of the market available to new landlords has actually risen. The research showed that on the 1 February 2020 there were 1,635 deals available to first-time landlords, while a year later this had fallen to 1,311. Despite this, a fall in BTL deals overall resulted in the percentage of the market available to first-time landlords increasing from 61% to 65% during this same period.

“Overall availability contracted sharply last year, which makes it even more positive to note that at 65%, the proportion of the market that is available to first-time landlords has grown by 4% year-on-year, meaning that would-be investors have plenty of choice, and is also an indication that providers are committed to servicing this demographic of borrowers,” explained Eleanor Williams, finance expert at Moneyfacts.co.uk.

Although this is good news for first-time landlords, as it demonstrates lender’s willingness to lend to new landlords, average rates over this period show that the market has not remained unscathed from the current economic uncertainty. For example, the average first-time landlord two year fixed rate on 1 February 2020 was 2.80%, which increased to 3.10% on the 1 February 2021. Meanwhile, the average first-time landlord five year fixed rate increased from 3.31% to 3.66% during this same period.

First-time landlords should, however, keep in mind that there are rates available in the first-time landlord chart significantly lower than average rates. For example, the lowest rate currently available in the first-time landlord chart currently stands at 1.64% fixed to 31 March 2023. To find the best deal available for their circumstances, new landlords may want to consider speaking to a mortgage broker who will be able to provide advice on the best deals available.

“Those who are considering whether this is the right time to invest would be wise to secure professional, qualified advice to help support and navigate through their choices,” Williams added.

“There may be benefits to setting up as a limited company, some products may require forethought regarding the number of properties they can have in their portfolio, and of course, whether the timing is appropriate for their own circumstances. Careful planning and ensuring that they protect any investments will be vital in these uncertain times.”

With saving rates at record lows and a volatile stock market, some may be considering investing in property as a long-term investment alternative. Although, traditionally, investing in BTL has been one of the most popular ways for consumers to invest in property, there are alternative options such as investing in real estate investment trusts (REIT) available.

To find out more about investing in BTL and the other property investment options available, read our guide on how to invest in property.

This week we reported that the first-time buyer chart has seen a strong start to 2021, with 117 products entering the market in the first six weeks of this year. In fact, mortgage deals across all charts remain strong this week, with highly competitive rates available in the remortgage and moving home charts, as well as more competition in the first-time buyer chart.

Those looking for a mortgage should note that below we have highlighted the lowest rates available in the charts this week, but the lowest rate on offer may not be the best deal for them. Instead, borrowers should look at other features of the deal, such as incentives and product fees, to determine the best choice. Those unsure of which deal is the best option for them should consider speaking to a mortgage broker, who will be able to provide help and advice in choosing the most suitable mortgage.

Homeowners whose fixed rate mortgage deal has ended could potentially save hundreds of pounds each month simply by remortgaging.

Once a fixed mortgage deal ends, homeowners are usually automatically put onto the lender’s standard variable rate (SVR), which can cost borrowers significantly more each month in repayments than if they remortgaged onto a new fixed rate deal. Here we’ve looked at how much the average homeowner could save by remortgaging at a 60% loan-to-value (LTV), 75% LTV and 85% LTV.

The number of mortgage deals available to those with a 10% deposit has increased by 117 during the first six weeks of 2021, offering first-time buyers some positive news after many were locked out of the mortgage market during 2020 when lenders withdrew deals.

Our research has found that not only has the number of deals risen since the start of the year, increasing from 160 deals available on the 1 January to 277 deals on the 12 February, but the number of lenders offering mortgages to those with a 10% deposit – at a 90% loan-to-value (LTV) – has also increased from 32 to 47 during this same period.

“Options for those with a 10% deposit have improved greatly over recent months, with 15 more providers offering 90% LTV products since the start of this year, and the number of products themselves increasing by 117 since the beginning of January,” said Eleanor Williams, finance expert at Moneyfacts.co.uk. “This means that there is far greater choice for would-be buyers in this area of the market. There are also more cashback deals now available to first-time buyers with a 10% deposit too, increasing to 83 from 50 a month ago.”

Although, 2021 has been a good year so far for first-time buyers, the number of products available at a 90% LTV is still vastly down compared to a year ago, when there were 776 deals in the market. In addition to this, since the start of January the average two year fixed rate on a 90% LTV mortgage has increased by 0.09%, rising from 3.65% on the 1 January to 3.56% on the 12 February. First-time buyers considering a five year fixed rate deal will, however, be pleased to see that since January the average rate has fallen slightly from 3.79% to 3.68%. To find out if a two of five year fixed deal is the best option, read our story looking at whether borrowers should lock into a five year deal.

On the whole, despite the slight fall in average two year fixed rates at a 90% LTV, the first-time buyer market has made a strong start to 2021. Williams added: “There are of course still hurdles for these borrowers to overcome; house prices inflated quite significantly last year – although early indications are this may be slowing in 2021 – and savings rates have continued to descend to rock bottom lows, making building a larger deposit difficult, as have high rental payments. But their options have been steadily increasing, and added to the news that the homebuyers using the current Help to Buy equity loan scheme have a further extension on the deadline for completions, there is hope that 2021 may see more potential home-buyers take that first step onto the property ladder.”

To help find the best deal for their circumstances, first-time buyers should consider speaking to a mortgage broker who will be able to provide advice and support in choosing the right deal. As well as this, a mortgage broker will usually be able to help buyers through the mortgage application process – more information can be found reading our guide on mortgage brokers.