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Derin Clark

Derin Clark

Online Reporter
Published: 03/02/2020

The buy-to-Let (BTL) mortgage sector is set to become more competitive, with Paragon Bank revealing that one in five brokers were expecting to introduce more BTL business during 2020.

In addition to this, landlords will also likely welcome the latest research carried out by, which found that the average rates charged on two and five year fixed BTL mortgages have fallen by more than a quarter of a percent year-on-year.

Buy-to-let market analysis 

Average buy-to-let rates Feb 15 Feb 16 Feb 17 Feb 18 Feb 19 Feb 20
Two-year fixed rate 3.50% 3.25% 2.90% 2.90% 3.07% 2.75%
Five-year fixed rate 4.39% 4.09% 3.74% 3.44% 3.56% 3.20%

Commenting on the research, Rachel Springall, finance expert at, said: “It’s encouraging to see that, despite economic pressures, the buy-to-let market is expected to grow in 2020. Lenders have cut rates on both short-term and long-term deals by around 0.30% year-on-year, so there could be borrowers looking to switch their deal. Cutting down on monthly loan payments may be at the forefront of landlord’s minds considering the mortgage tax relief changes.

“Since April 2017, mortgage interest tax relief for buy-to-let landlords – which allowed them to deduct mortgage expenses from rental income to reduce a tax bill – has slowly been phased out. Indeed, by April this year it will be gone entirely, which means landlords could face a larger tax bill and less rental income as a result. This shake-up may deter potential landlords who feel their profit margins will be tightened, but despite this, optimism for 2020 appears resilient and lenders are clearly working hard to entice prospective borrowers. However, it is hard to tell whether this will wane as the year progresses.

“Landlords who are looking to switch their deal could save a decent amount on loan payments each month, due to the fall in interest rates. In fact, if a landlord had a five-year fixed rate mortgage in 2015 and was looking to refinance, the average rate has dropped by a staggering 1.19%. This would equate to a difference of £1,947 a year in monthly repayments if a landlord were to take a loan of £250,000 on a 25-year term compared to back in 2015 for the same amount and term.

“If landlords are looking at alternative ways to boost their profits, then they could look to set themselves up a limited company – as the tax relief cull applies to private landlords – but they will need to consider any stamp duty costs and the associated taxes for a business, such as corporation tax on profits.

“Whatever existing landlords or new investors decide, it could be an easier process to find the right deal by seeking independent advice and to closely monitor the market for any significant changes.”

Buy-to-let mortgage rates

A full list of the buy-to-let mortgage rates that are currently available can be found on our buy-to-let mortgage chart.


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