Moneyfacts UK Mortgage Trends Treasury Report data, not yet published, reveals that there are glimmers of hope emerging for the Buy to Let mortgage market, following the significant initial impact of the Coronavirus pandemic. In welcome news to many landlords, the choice in products has increased, and some higher loan-to-value (LTV) average rates have reduced. These shifts are likely to be linked with lenders’ focus on supporting existing borrowers alleviating and of course the Government guidance on valuation restrictions lifting.
Overall, there are 280 more BTL products available now than there were at the start of May 2020. The product choice at 75% LTV has increased by 46 two year fixed rate deals and 54 more products are available in the five year fixed rate bracket. The picture at 80% LTV is similar, with this traditionally smaller sector increasing by 26 two year fixed rate products and 20 more options available for those seeking a five year fixed rate over the month.
Average interest rates on fixed BTL mortgages have risen slightly for two and five year fixed rates overall, likely due to the increase in the number of products that these averages are based on. However, there is cause for celebration for landlords who have only a 20% deposit available, as rates on both two and five year fixed rate BTL products at 80% LTV have reduced, by 0.49% and 0.67% respectively, which will be great news for those considering purchasing or at remortgaging at this LTV.
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|Buy-to-let market analysis|
|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|
|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%|
Eleanor Williams, Finance Expert at Moneyfacts, 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.”