Derin Clark

Derin Clark

Online Reporter
Published: 10/06/2019

Product competition in the buy-to-let (BTL) market has increased significantly and is at its highest level since the beginnings of the financial crisis in October 2007, data from the Moneyfacts UK Mortgage Trends Treasury Report will show.

The report, which is not yet published, shows that there are currently 2,396 BTL products available, which is the most competitive the market has been since 3,305 products were available in October 2007. In addition to this, since June 2018 competition has intensified, with the number of products available increasing by 21%, while in the past month alone it has risen by 143 products, from 2,253 to 2,396.

Despite the increase in competition, the average BTL mortgage rates have risen over the past 12 months, with the average two-year BTL fixed rate mortgage increasing by 0.17% from 2.88% in June 2018 to 3.05% this month, while the average five-year BTL fixed rate has risen by 0.11% to 3.54%, compared to 3.43% in June 2018. Saying this, both rates are still significantly lower than in October 2007, when the average two-year BTL fixed rate stood at 6.36% and its five-year counterpart stood at 6.39%.

  All available BTL products Two-year fixed rate BTL mortgage Two-year fixed rate BTL mortgage Five-year fixed rate BTL mortgage Five-year fixed rate BTL mortgage
  Product numbers Product numbers Average rate Product numbers Average rate
Oct-07 3,305 409 6.36% 181 6.39%
Jun-18 1,929 678 2.88% 637 3.43%
May-19 2,253 739 3.02% 730 3.53%
Jun-19 2,396 802 3.05% 785 3.54%

Darren Cook, finance expert at Moneyfacts, said: “The BTL market has experienced a number of regulatory changes during recent years, however, it seems that product competition within this specialised mortgage area is continuing to grow. A 21% increase in availability to 2,396 products over the past 12 months indicates that providers are keen to offer potential BTL investors plenty of choice within the sector.

“Despite this increasing competition in terms of the total number of products available over the past year, average rates have unfortunately not fallen, and have instead followed suit, with the average two-year fixed rate increasing by 0.17% to 3.05% and the average five-year fixed rate increasing by 0.11% to 3.54% over the same period.

“The largest concentration of BTL product choice can be found at the maximum 75% loan-to-value (LTV) tier, where there are currently 352 (44%) two-year fixed rate products available and 374 (48%) five-year fixed rate products available. Coincidently, the average fixed rates at the 75% LTV tier for the two and five-year sectors are currently 3.05% and 3.55% respectively, equalling or near-equalling the average rates for both terms across all tiers.

“The increase in the BTL average rates contrasts with the downward trajectory of their residential mortgage counterparts, where product competition seems to have instead resulted in rates falling. This disparity in trends is likely to be attributed to the different approach lenders take to risk between these two sectors, and that economic uncertainty may be having a more adverse influence on the BTL mortgage market than it is having on the residential mortgage market.”

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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