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Landlords have had a difficult time of late, what with changes to tax relief coming into effect, just a year after adjusting to new stamp duty rules. The saving grace has been that competition in the buy-to-let (BTL) mortgage market was booming, but it seems that even this may now be on the backburner, with figures showing that BTL mortgage rates have begun to edge up.
That's according to the latest Buy to Let Mortgage Product Index from Mortgages for Business, which shows that two, three and five-year fixed BTL mortgage rates all rose in April, up from their March lows. The average two-year rate rose by 0.04% from March to stand at 2.90%, while the three-year rate rose by 0.03% to 3.56% and the five-year by 0.02% to 3.76%.
Not only does this mark a near-perfect reversal of March's reductions, but it also marks the first month since January that the index has seen any rate increases, with the averages having consistently fallen or remained static for some months prior.
"For some time now buy-to-let mortgage lenders have been cutting rates to maintain lending volume in a sector that has been actively targeted by both the taxman and the regulator," commented Steve Olejnik, COO of Mortgages for Business. "Rates can only fall so far, however, and figures from April suggest we may have reached the limit.
However, it's a slightly different story for variable BTL rates, where no set pattern appears to be emerging. Indeed, the average five and two-year tracker rates increased by 0.02% and 0.12% respectively (to 2.91% and 2.84%), mirroring the trajectory in the fixed sector of the market, but other rates continue to fall: the three-year variable rate fell by 0.02% to 3.53%, while term product rates fell by 0.11% to 4.74%.
Not only that, but the slightly declining market for landlords doesn't seem to correlate in terms of availability, with April seeing no real change in the number of products available: the index revealed that there are now 1,196 BTL mortgages available, an increase of three from the previous month, with the number of BTL lenders remaining at 36.
This mirrors our own data, as revealed in the latest Moneyfacts UK Mortgage Trends Treasury Report, which shows that the number of mortgages for landlords has remained fairly static in recent months, amid general uncertainty in the market.
If you're a landlord, what does all this mean? Well, there probably shouldn't be too much to worry about at present, at least where rates are concerned. Averages may be edging up in the fixed sector of the market, but they're still historically low, and with plenty of BTL mortgages to choose from, there are plenty out there that come well below average. Check out our Best Buys or use our buy-to-let calculator to see what we mean.
You may be slightly more concerned about the other changes impacting the market, in which case you'll want to be prepared. Find out more about the tax changes and the possibility of incorporating to avoid them, and get the right advice so you know what to do next.
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