Increase in BTL mortgage deals entering the market | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 08/06/2020

There is good news for landlords today as the latest data on the buy-to-let (BTL) market shows that not only is the number of products in the sector increasing, but average rates on some of the higher loan-to-value (LTV) deals have fallen.

Data due to be published in the Moneyfacts UK Mortgage Trends Treasury Report shows that there are overall 280 more BTL products available now than there were at the start of May 2020. For landlords looking for a deal at 75% LTV, the number of products offering a two year fixed rate deal has increased by 46 and the number of five year fixed rate deals has risen by 54. Meanwhile, landlords looking for an 80% LTV deal will find that the number of two year fixed rate products have increased by 26 and the number of five year fixed rate deals by 20.

It was not all good news, however, as the average rates overall on both two and five year fixed rate BTL deals have increased slightly since the start of May, but this could be due to the increase in the number of products that these averages are based on.

While overall rates have risen, landlords looking for a deal at an 80% LTV will be pleased to see that rates on both two and five year fixed rate BTL products have reduced, by 0.49% and 0.67% respectively.

 

Buy to let market analysis 

Product numbers May 2020 June 2020 Difference 
BTL product count (fixed and variable) 1455 1735 280
Two year fixed rate BTL all LTVs 491 597 106
Two year fixed rate BTL at 75% LTV 165 211 46
Two year fixed rate BTL at 80% LTV 9 35 26
Five year fixed rate BTL all LTVs 480 607 127
Five year fixed rate BTL at 75% LTV 176 230 54
Five year fixed rate BTL at 80% LTV 6 26 20

 

Average rates May 2020 June 2020 Difference 
Two year fixed rate BTL all LTVs 2.51% 2.59% 0.08%
Two year fixed rate BTL at 75% LTV 2.60% 2.64% 0.04%
Two year fixed rate BTL at 80% LTV 3.61% 3.12% -0.49%
Five year fixed rate BTL all LTVs 2.94% 3.03% 0.09%
Five year fixed rate BTL at 75% LTV 3.15% 3.17% 0.02%
Five year fixed rate BTL at 80% LTV 4.32% 3.65% -0.67%

Source: Moneyfacts Treasury Reports. Data shown is as at the first of the month unless otherwise stated. 

Commenting on the data, Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “The Bank of England base rate currently remains at its lowest ever level of 0.10%, resulting in further despair for savers. However, those looking to invest their money in property now that the mortgage market has reopened may feel now is a good time to explore their options, particularly with rates becoming more competitive and product choice beginning to return this month.

“A recent survey from Rightmove, which was conducted as the property market reopened at the end of May 2020, revealed that demand from tenants for rental properties increased by 33% when compared to the same time period last year. Therefore, the increase in buy-to-let product choice will be welcome news to landlords.

“This positive growth in choice is reflected in the higher LTV tiers, with deals for landlords with just a 25% or 20% deposit or equity keeping pace across two and five year fixed rate options. This is encouraging considering that early in the Covid-19 crisis, providers were focused on supporting existing customers and restrictions meant that physical valuations were not feasible, seeing many lenders reduce their offerings to lower risk, lower LTV products. These developments left those with less equity or deposit un-catered for.

“Average rates have increased slightly over the last month, likely impacted by the higher number of mortgage products available from which this average is calculated. The overall two year fixed rate sees a 0.08% rise, while the five year fixed equivalent increased by 0.09%. However, landlords who may be concerned about increasing mortgage rates will be heartened to see that at 80% LTV, the two year fixed average rate has dropped month-on-month. In this same bracket, those looking for longer-term protection from interest rate volatility and considering locking into a five year fixed rate deal will also find rates have fallen over the same period – which sees it sit lower than the March 2020 figure of 3.98% as a result.

“As we begin to see indications that the buy-to-let market may be starting to recover, the full economic impact of the current crisis is still not yet clear for tenants and landlords alike. However, those who are in a position to consider capitalising on possible falls in house prices to expand their property portfolios or indeed those looking to switch their current deal, may wish to move quickly. If they do decide to make a move, they would be wise to seek advice from an independent, qualified financial adviser regarding their options, as criteria and requirements continue to be updated.”

How to become a BTL landlord

If you're thinking about becoming a landlord take a look at our guide Five steps to becoming a buy-to-let landlord.

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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