Lenders Target Newbie Landlords With BTL Deals | moneyfacts.co.uk

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Eleanor Williams

Finance Expert & Press Officer
Published: 03/02/2022

Mortgage providers are courting first-time landlords with a range of new buy-to-let (BTL) mortgage products, as demand for rental properties soars.

About 64% of the deals available across the market are available to first-time landlords (FTLs), a figure that has remained stable over the past year. This month, there are 2,235 FTL products on offer, up significantly from 1,311 this time last year and 1,801 as recently as August 2021.

Looking at the cost of FTL mortgage products, the rate on the average two-year fixed deal has crept up by 0.09% over the past year to reach 3.19% in February. In contrast, the overall average two-year fix – that is, deals available to all landlords – has actually fallen from 2.97% to 2.90% over the year. But, encouragingly, rates have fallen year-on-year on five-year fixed deals for both first timers and more experiences landlords. The average FTL five-year fix went from 3.66% to 3.47% in the year to February, while the overall average five-year fix dropped from 3.32% to 3.16%.

Post-pandemic rental boom

This is encouraging news as it shows mortgage providers are still keen to attract first-time landlords, some of whom will likely be trying to cash in on the current rental boom, said Eleanor Williams, finance expert at Moneyfacts.co.uk.

The Rightmove Rental Trends Tracker shows that rents are rising at the fastest pace ever recorded, while tenant demand has doubled. This might help offset some of the less rosy aspects of the buy-to-let sector, such as tighter regulation and the removal of tax breaks. 

“Perhaps, understandably, some consumers may therefore be considering investing in bricks and mortar, especially while the returns available on standard savings accounts continue to fail to beat the rate of inflation,” said Williams.

“Our data shows that there are currently 2,235 products on offer to FTLs, up from 1,311 deals this time last year. Echoing the recovery of the wider BTL sector, where product availability has returned to levels in excess of those seen pre-pandemic, would-be new landlords may be pleased to note that, at 64%, the proportion of the market catering to their demographic has remained relatively stable year-on-year. In fact, provision for FTLs currently remains 3% above that recorded in February 2020 (61%), indicating that lenders remain committed to supporting prospective landlords.

“FTLs concerned about potential future rate rises may wish to consider locking into the mid-term stability that a five-year fixed rate product provides. However, those who might prefer the shorter commitment of a two-year fixed rate could be disappointed to see that at 3.19% there has been a 0.09% increase in the average two-year fixed rate for FTLs since February 2021, even though the equivalent overall average rate has fallen by 0.07% year-on-year.”

While providers seem to be working hard to cater to prospective landlords, anyone deciding whether now is the time to join the BTL arena should take professional advice before taking the plunge, she added.


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