Derin Clark

Derin Clark

Online Reporter
Published: 01/07/2019

Competition within the first-time landlord buy-to-let mortgage market has increased significantly over the last five years seeing a rise in the number of products available and a reduction in rates, research from Moneyfacts.co.uk reveals.

Over the last five years, the number of products available for first-time landlords has increased from 645 in 2014 to 1,405 today. As well as this, rates for both two-year and five-year fixed mortgages have also fallen, with the average two-year fixed rate decreasing from 4.01% in 2014 to 2.97% today and the average five-year fixed rate falling from 4.68% to 3.52% during the same period.

Buy-to-let market analysis – First-time landlord products

  Jul 2014 Jul 2017 Jul 2018 Jul 2019
Average two-year fixed rate 4.01% 2.85% 2.83% 2.97%
Average five-year fixed rate 4.68% 3.63% 3.94% 3.52%
Number of overall products 645 1,034 1,268 1,405

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Fixed rates for first-time landlords start below 1.50% on a two-year fixed deal, but the associated upfront product fees must be considered carefully. Borrowers must ensure they weigh-up the true cost of any deal before they commit; for example, choosing the lowest two-year rate in the market from Barclays Mortgage at 1.46% would cost £20,901 in repayments after the first two years, which includes its £1,795 product fee*. However, if they opted for a deal with a lower fee, such as the mortgage from Post Office Money® priced at 1.48% with a £1,495 product fee, they would have saved £255, as the repayment would be £20,646 over two years.

“First-time landlords concerned about potential rate rises may instead consider a five-year fixed deal, and thankfully rates have fallen in this sector since 2014. In fact, the average five-year fixed rate for first-time landlords has fallen by 1.16% since July 2014, down from 4.68% to 3.52% today.

“As the market is awash with economic uncertainties and regulatory adjustments, consumers would do well to first seek independent financial advice if they are considering a buy-to-let investment, not just to find the best product, but to also review these impacting influences.”

 

*Based on £200,000 repayment mortgage over a 25-year term.

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 Any products featured may be withdrawn by their provider or changed at any time.

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