Buy-to-let product choice has increased whilst average two and five-year fixed rates have fallen, according to the latest analysis from Moneyfacts.co.uk.
New figures revealed the average two-year fixed rate was lower now than compared to 2019.
Meanwhile, the beginning of July saw the highest number of product options on offer in the buy-to-let space.
The 2,709 deals on the market at the start of this month represented a 971 leap on this time last year when availability was limited following the product withdrawals which took place during the pandemic.
Moneyfacts said, landlords with 40% equity or deposit would find, even though their level of product choice was lower than this time last year, they were amongst those who might be able to secure a competitive new deal as the average two and five-year fixed rates in this bracket both remained 0.03% lower year-on-year.
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Eleanor Williams, finance expert at Moneyfacts.co.uk, said there were also 365 deals more available now than were recorded in July 2019, demonstrating the strength and resilience of the sector in the aftermath of an unprecedented 18 months.
“The demand for buy-to-let could well remain strong in the months to come as rental demand is prevalent, indicated by recent research from Propertymark’s Private Rented Sector report, May saw a record-breaking number of new prospective tenants registered,” she added.
“Whether now is the right time to invest in property may also come down to the desire to earn a decent income.
“Indeed, research from Nottingham Building Society revealed that 61% of landlords surveyed felt property was a better investment due to low interest rates for savings – and this coupled with high demand for rental accommodation could sway new investors to dive into the buy-to-let sector.”
Williams also explained, due to the influence of the pandemic, interest rates for buy-to-let had climbed year-on-year with the overall two and five-year average interest rates of 2.98% and 3.28% being 0.37% and 0.31% higher respectively than a year ago.
This, she said, may be linked to the increase in availability of higher loan-to-value products.
She added: “These higher LTV deals usually charge a higher rate and can therefore impact these averages. However, despite creeping up a further 0.02% month-on-month, what is positive is the fact that the overall two-year fixed rate is lower now than in June 2019 – which means those coming off a two-year fixed deal may still find a better deal, depending on how much they have in equity and their circumstances.
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“There could still be some understandable hesitation from prospective landlords with some existing investors who could even be considering downsizing their portfolio depending on the pandemic’s impact. However, we are beginning to see some improvements in average rates in certain loan-to-value brackets on a month-on-month basis.
“As house prices rise, demand for rental accommodation is high, and savings rates remain poor, therefore, investing in property could be enticing to some. It is vital though that would-be landlords and those looking to change their deal seek advice to ensure it’s the right time for them and they find the best package for their circumstances and plans.”
|Buy-to-let mortgage market analysis|
|BTL product count – fixed and variable rates||2,344||1,738||2,486||2,709|
|All 80% LTV BTL products – fixed and variable rates||212||77||147||198|
|All 75% LTV BTL products – fixed and variable rates||971||616||884||952|
|All 60% LTV BTL products – fixed and variable rates||342||414||341||340|
|BTL two-year fixed – all LTVs||3.01%||2.61%||2.96%||2.98%|
|BTL two-year fixed – 80% LTV||3.75%||3.18%||4.20%||3.94%|
|BTL two-year fixed – 75% LTV||3.02%||2.72%||3.01%||3.01%|
|BTL two-year fixed – 60% LTV||2.07%||2.28%||2.28%||2.25%|
|BTL five-year fixed – all LTVs||3.50%||2.97%||3.31%||3.28%|
|BTL five-year fixed – 80% LTV||4.14%||3.82%||4.34%||4.15%|
|BTL five-year fixed – 75% LTV||3.51%||3.14%||3.42%||3.36%|
|BTL five-year fixed – 60% LTV||2.51%||2.65%||2.64%||2.62%|
|Data shown is as at first working day of month, unless otherwise stated. Source: Moneyfacts.co.uk|
Source: Mortgage Finance Gazette
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