How the Coronavirus pandemic has impacted BTL mortgage rates

As the Coronavirus pandemic continues to impact the UK economy, it has also affected the buy-to-let (BTL) mortgage rates. Here we take a look at how the pandemic has impacted BTL mortgage rates and the deals available to landlords.

Our research shows that despite two base rate cuts in March, the average rate on a 60% loan-to-value (LTV) two year BTL mortgage has increased from 1.92% in January to 2.39% today, while the average rate on a 60% LTV five year fixed BTL has increased from 2.32% to 2.76% during the same period.

Landlords looking for a two year fixed rate BTL deal on a 70% LTV will have seen rates fall since the beginning of the year, standing at 2.98% in January and falling to 2.78% today. Meanwhile, during the same period, the average rate on a two year fixed rate BTL deal at 80% LTV fell slightly, from 3.64% to 3.61% today.

Those looking for a five year deal at 80% LTV will have seen rates increase since the beginning of the year, from 4.03% in January to 4.32% today. The average rate on a five year deal at 70% LTV, however, has also fallen since January, from 3.3% at the start of the year to 3.06% today.

It seems that the economic uncertainty caused by the Coronavirus pandemic has resulted in some BTL mortgage rates rising. For example, up until March, average rates on 60%, 70% and 80% on both two and five year fixed deals had been constantly falling, but April saw a significant increase in rates on two and five year 80% and 60% LTVs. Between March and April, 60% LTVs saw the biggest increase on both terms, with the average two year rate increasing by 0.35% (from 1.89% to 2.24%) and the average five year rate increasing by 0.31% (from 2.31% to 2.62%).

The average rates on 70% LTVs, however, continued to fall between March and April, with the average two year fixed rate at 70% LTV falling by 0.12% (from 2.91 to 2.79) during this period and the average five year rate at 70% LTV falling by 0.18% (from 3.21% to 3.03%).

BTL mortgage rate analysis

One reason why rates may have fallen on 70% LTV deals on two and five year fixed terms is due to the fact that the number of products available have also fallen during this time period, which has resulted in an overall drop in average rates. For example, the number of two year BTL deals available on a 70% LTV fell by 45, from 132 on the 1 March to 87 on the 1 April, while the number of five year BTL deals fell by 38, from 115 to 77. Two and five year deals at 80% LTV also fell significantly from March to April, with the number of two year BTL deals at 80% falling by 84, from 141 to 57 and the number of five year deals falling by 81, from 150 to 69.

While lenders have been withdrawing deals at higher LTVs, the number of BTL deals at 60% LTV has increased between March and April. From the 1 March to the 1 April, the number of BTL two year deals at 60% had increased by five, from 124 to 129, and the number of 60% BTL five year deals increased by seven, from 133 to 140.

Number of BTL mortgage deals available

The fact that no physical valuations or inspections are able to take place at the moment has had a major impact on the letting market, however with many BTL mortgage lenders offering an automated valuation model (AMV), landlords are able to apply for mortgages and remortgages. Currently, houses in multiple occupation (HMOs) and non-standard properties do not qualify for automated valuations, but it is available for landlords needing valuations on standard properties.

BTL mortgage lenders currently offering AMV

The lowest rate available in the two year fixed BTL mortgage chart currently comes from The Mortgage Works, which offers 1.19% (4.5% APRC) fixed until 31 May 2022 and is available to those looking for a 65% LTV. The Mortgage Works also offers the lowest BTL mortgage rate for those with a 70% LTV, offering 1.59% fixed until 31 May 2022 on an LTV of up to 75%.

Meanwhile, in the five year BTL chart, Birmingham Midshires Solutions currently has the lowest rate on a 60% LTV offering 1.62% (3.8% APRC) fixed until 30 June 2025. The lowest five year BTL rate for those looking for a 75% LTV is from The Mortgage Works, which offers 1.94% (4.4% APRC) fixed until 31 May 2025 on an LTV of up to 75%.