Product choice in the buy-to-let market is broadening but rates are also on the rise, the latest analysis from Moneyfacts.co.uk has revealed.
Figures released today show availability of products is at a one-year high, having risen for the fifth consecutive month to reach 2,333.
Moneyfacts said the sector had recovered to 81% of pre-pandemic levels (compared to 68% recovery in the residential sector) and now offered the highest number of products seen since last March, providing landlords with a greater level of choice.
Yet, at the same time, the average two-year fixed rate was 0.28% higher year-on-year – at 3.05% was the highest recorded since June 2019 (also 3.05%).
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The five-year equivalent at 3.41% increased 0.17% compared to a year ago and was currently the highest since September of 2019, when it reached 3.44%.
Month-on-month, the only borrowing tiers where rates had fallen since February were at 60% loan-to-value (LTV).
Moneyfacts also revealed how the proportion of the fixed rate buy-to-let sector which was offering fee-free deals or incentives – such as free valuations or free legal fees – had also reduced year-on-year.
This, Moneyfacts, said, indicated landlords may have to search a little harder for deals with the right incentive package for them.
Meanwhile, the proportion of the market where cashback was available has risen to 25% – a 4% improvement on last year.
Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “There is no doubt that the impact of the pandemic has been polarising, with the buy-to-let sector not escaping from this trend.
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“There may therefore be landlords whose focus will be on cutting costs and increasing margins where possible, perhaps by refinancing their existing buy-to-let mortgages.
“Equally, there may be some who are now in the fortunate position of being able to consider investing in a rental property for the first time.”
Williams also explained how the only LTV tier where average fixed rates did not increase this month was at 60% LTV, where both the two and five-year average fixed rates fell by 0.38% and 0.27% respectively.
She added: “It is important to note though that these are averages, and therefore while representative of the market as a whole, there are some very competitively priced products available, with some – depending on LTV and criteria – available at below 2%.
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“Therefore, those who are hoping to refinance or take on a new deal would do well to shop around.”
|Buy-to-let mortgage market analysis (Source: Moneyfacts)|
|BTL product count – fixed and variable rates||2,897||2,100||2,333|
|BTL two-year fixed – all LTVs||2.77%||2.97%||3.05%|
|BTL two-year fixed – 80% LTV||3.56%||3.97%||4.14%|
|BTL two-year fixed – 60% LTV||1.89%||2.52%||2.14%|
|BTL five-year fixed – all LTVs||3.24%||3.32%||3.41%|
|BTL five-year fixed – 80% LTV||3.98%||4.11%||4.29%|
|BTL five-year fixed – 60% LTV||2.31%||2.79%||2.52%|
|Buy-to-let fixed mortgage market analysis (Source: Moneyfacts)|
|Deals with no product fee||475 (19%)||254 (14%)||301 (15%)|
|Deals with free/refunded legal fees||840 (34%)||614 (34%)||614 (30%)|
|Deals with a free/refunded valuation||1352 (55%)||774 (43%)||789 (39%)|
|Deals with cashback||531 (21%)||307 (17%)||503 (25%)|
Source: Mortgage Finance Gazette