Buy-to-let product choice reaches post-crisis high
BUY-TO-LET borrowers have the greatest choice of mortgage products since the financial crisis, Moneyfacts analysis shows, despite the challenges facing the sector.
Moneyfacts found that landlords now have 2,162 buy-to-let mortgage products to choose from, the highest number since October 2007 when 3,305 products were on the market.
Today the average rate on a two-year fixed rate buy-to-let mortgage is 3.12 per cent, compared to a 2.96 per cent rate on offer in March last year.
The average rate on a five-year fix is 3.61 per cent, up from 3.43 per cent a year ago.
Darren Cook, finance expert at Moneyfacts, said this trend is positive, despite some of the pressures facing landlords such as tax and regulatory changes.
“It is encouraging that buy-to-let landlords have more mortgage choice than they have had at any time in almost 12 years,” he said. “Total product numbers have increased by 397 over the past year and by 706 over the past two years to stand at 2,162 products today.
“Despite ongoing uncertainty in the property market, providers are not shying away from offering landlords a greater choice of products, although it is also evident from our research that heightened competition to try and attract BTL business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector.
“Indeed, the average two-year fixed BTL mortgage rate has increased by 0.2 per cent since September 2018 and the average five-year fixed rate has increased by 0.15 per cent over the same period.
“As there appears to have been no sustained increases in interest SWAP rates since September 2018, a strong argument can be made that the recent increases to BTL mortgages interest rates have been a result of BTL mortgage providers attributing a little more to risk into their product rates due to uncertainty over future economic conditions.
“The disparity in the direction of movement between BTL and residential interest rates may be due to the way these two types of lending are primarily assessed. BTL mortgage providers generally consider the potential rental income and affordability during assessment, whereas residential mortgage providers typically look back at income earned by the borrower and affordability.”
Read more: A guide to buy-to-let IFISAs
Among P2P lenders specialising in buy-to-let property finance, LandlordInvest offers an initial rate of 5.5 per cent on buy-to-let loans of between £30,000 and £300,000 over one to five years (up to 80 per cent loan to value), while Landbay has a five-year fixed rate BTL mortgage at 3.99 per cent, (also up to 80 per cent LTV).