Overall buy-to-let product availability – fixed and variable – has improved month-on-month, returning to levels not seen since August 2022 (2,375), according to the latest analysis by Moneyfacts.co.uk.
There are now 2,400 options available, the highest count since July 2022 (2,746) which is an encouraging sign of recovery.
Average fixed rates have fallen month-on-month, both over a two-year or five-year fixed term. However, based on average rates, those coming off a five- or two-year fixed deal will find the latest rates are more than 2% higher.
| Buy-to-let market analysis | |||||
| Product numbers | Mar-18 | Mar-21 | Mar-22 | Feb-23 | Mar-23 |
| BTL product count (fixed and variable) | 1,872 | 2,333 | 3,332 | 2,246 | 2,400 |
| Two-year fixed rate BTL all LTVs | 564 | 767 | 1,062 | 539 | 632 |
| Two-year fixed rate BTL at 60% LTVs | 90 | 94 | 115 | 90 | 95 |
| Two-year fixed rate BTL at 75% LTVs | 246 | 313 | 453 | 271 | 313 |
| Five-year fixed rate BTL all LTV’s | 532 | 822 | 1,271 | 865 | 914 |
| Five-year fixed rate BTL at 60% LTVs | 87 | 102 | 124 | 103 | 107 |
| Five-year fixed rate BTL at 75% LTVs | 229 | 360 | 578 | 412 | 436 |
| Average rates | Mar-18 | Mar-21 | Mar-22 | Feb-23 | Mar-23 |
| Two-year fixed rate BTL all LTVs | 2.96% | 3.05% | 3.05% | 5.95% | 5.81% |
| Two-year fixed rate BTL at 60% LTV | 2.12% | 2.14% | 2.29% | 5.55% | 5.39% |
| Two-year fixed rate BTL at 75% LTV | 3.11% | 3.08% | 3.00% | 5.95% | 5.78% |
| Five-year fixed rate BTL all LTVs | 3.43% | 3.41% | 3.29% | 5.85% | 5.72% |
| Five-year fixed rate BTL at 60% LTV | 2.74% | 2.52% | 2.54% | 5.37% | 5.22% |
| Five-year fixed rate BTL at 75% LTV | 3.59% | 3.49% | 3.27% | 5.95% | 5.75% |
| Source: Moneyfacts.co.uk | |||||
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “It is encouraging to see buy-to-let product choice gradually recover from the shock surrounding the fiscal announcement. The choice of deals to landlords plummeted and both the average two and five-year fixed rates rose to 6% towards the tail end of 2022, but thankfully, both rates have slowly dipped below this level. There are now 2,400 deals for landlords to choose from, up from just 988 in October 2022, thanks to consecutive months of growth.
“The drop in average buy-to-let rates appear more subdued than seen within the residential mortgage sector, but lenders have made moves to entice new business despite some investors’ concerns surrounding rental income margins. As both the average two- and five-year fixed rates sit above 5%, compared to around 3% a year ago, it’s clear that landlords are likely to see their monthly repayments much higher than they perhaps anticipated. There may even be those looking to sell up this year because of the rise in interest rates, tax changes for holiday lets and CGT or even EPC requirements – all of which dampen profit margins or investment returns on sale of a property.
“Landlords may be waiting for fixed mortgage rates to come down further or indeed opt for a tracker mortgage to give them more flexibility to eventually switch their deal. However, interest rates are only part of the decision-making process when entering a buy-to-let investment. Whether that be for new or existing landlords, it is always wise to seek advice to ensure it is the right time to commit to a deal.”
There might be more BTL mortgages available and rates might have dropped marginally lately but no getting away from the fact that if a BTL landlord has a fixed deal coming to an end they will be paying very nearly twice as much to get a new one. Say you had £150,000 at 3.29% interest only over 25 years and now you have the same at 5.72% your mortgage would rise from £234 to £440 a month, an increase of £206. Does the landlord swallow it or pass it onto the tenants?
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