Category: Buy To Let
First Published: 31/07/2017
Despite the increased scrutiny the buy-to-let (BTL) market has been facing, not to mention changes to tax relief and higher stamp duty, BTL mortgage competition is showing no signs of stopping, which is great news for landlords looking to build their portfolio.
Our research shows that the average two-year fixed BTL mortgage rate has fallen by 0.31% in just one year, and even though the pace of the fall has slowed in recent months – the vast majority of that decrease took place last year, as the table below shows – the continued drop is nonetheless welcome.
The figures also show that the market has now recovered from the significant drop in products that was seen at the start of this year, suggesting that landlords can benefit not only from low rates, but also a higher number of mortgages to choose from.
|Average Two-Year Fixed Rate||3.22%||2.92%||2.91%|
|Number of products||1,402||1,408||1,610|
“The BTL market has seen some turbulent times, with significant tax changes, tougher affordability rules, and still more changes to come into force in September,” said Charlotte Nelson, finance expert at moneyfacts.co.uk. “It’s little wonder many thought the BTL mortgage market might show signs of strain. And yet, rates have continued on a downward path. Since the introduction of new regulation in January, however, the pace of the reductions has slowed considerably.”
That new regulation brought tighter affordability rules into play, effectively reducing the amount that landlords are able to borrow. This had a knock-on effect on availability, and indeed the pace of rate cuts, yet it seems that the market is recovering.
“Product numbers have been bolstered since the dramatic fall that occurred in January, giving landlords looking for a mortgage deal today more choice,” said Charlotte. “This shows that after the initial shock of the changes, providers are keen to recover and keep the market buoyant.”
However, there’s further change to come, and providers are now starting to gear up for yet more regulatory intervention.
“From 30 September, lenders will have to apply stricter standards for landlords with four or more properties,” explained Charlotte. “Given that 89% of the mortgage deals on the market today are available for borrowers with four or more properties in their portfolio, these changes will affect a large chunk of the market.
“Faced with these changes, it is likely that competition among providers may start to ebb initially, with the providers instead focusing on their core range and getting their criteria up to date. With the added uncertainty in the economy, landlords looking for a mortgage deal are likely to face a bumpy road for a while. Anyone unsure of their options should seek out independent financial advice.”
Given the changes on the way, it makes a lot of sense to consider your options and make the most of the competition while you can! Check out the best buy-to-let mortgages by heading to our charts, or use our BTL mortgage calculator for a more personalised overview of the options available.
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.