Good news for buy-to-let landlords as mortgage choice continues to rise


The number of mortgage deals for buy-to-let landlords has increased to the highest level since March 2020. Landlords and investors are likely welcoming the additional choice.

With demand in the private rented sector at record-breaking levels, there has also been strong demand for mortgages from buy-to-let landlords. Recently, lenders have brought forward more products across the board, including for buy-to-lets.

The number of mortgage products for buy-to-let landlords is at the highest level since before the first national lockdown due to the coronavirus pandemic. At the beginning of July 2021, the buy-to-let mortgage market had 2,709 products on offer, according to data from Moneyfacts. At the beginning of March last year, there were 2,897 deals available.

This data highlights that the number of deals available has rebounded from the pandemic. Eleanor Williams of Moneyfacts says: “Landlords now have the highest level of product choice that we have recorded in over a year.

“At 2,709 the number of products available to investors is far more than the choice they were faced with this time last year, but perhaps even more interesting is that there are 365 deals more available now than we recorded in July 2019, demonstrating the strength and resilience of this sector in the aftermath of an unprecedented 18-months.”

Buy-to-let landlords with a 25% deposit have the most choice of mortgage deals. This month, 952 deals are available at the 75% loan-to-value (LTV).

What is happening with interest rates?

The average rate for both two and five-year fixed buy-to-let mortgages has increased year-on-year. Two-year fixed mortgage rates went from 2.61% in July 2020 to 2.98% July 2021. This is an increase of 0.37%. Five-year fixed rates have risen by 0.31% from 2.97% to 3.28% during the same period.

Despite the increase in the average mortgage rate year-on-year, rates have still fallen since 2019. This could be particularly good news for buy-to-let landlords nearing the end of a two-year fixed deal.

In July 2019, the average rate on a two-year deal was 3.01%. That is 0.03% higher than this month’s average rate. And the average five-year fixed rate was 3.50%, which is 0.22% higher than the average rate this month.

Additionally, the average rate for a mortgage with 75% LTV on both two and five-year fixed deals have also fallen since 2019 with 0.01% and 0.15% decreases respectively.

Will buy-to-let investment remain strong?

Currently, demand in the private rented sector is particularly strong. Propertymark’s Private Rented Sector report revealed May say a record-breaking number of new prospective tenants registered.

This high demand, along with low interest rates, will likely cause buy-to-let investment to remain strong in the coming months. It could even be a good time for some first-time landlords to enter the buy-to-let sphere.

Eleanor Williams comments: “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.”

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Good news for buy-to-let landlords as mortgage choice continues to rise


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