Buy-to-Let deals increase but rates are still high

Higher Interest Rates are here to stay

There are currently around 2,000 buy-to-let mortgage products available, according to Stephen Kerrigan, mortgage advisor from Doncaster. This is an increase of 500 deals compared to May 2020.

While the number of products is higher than any time since March of last year, anyone looking to get a buy-to-let mortgage still remained far below pre-pandemic levels. For example, January 2020 they were 2,583 mortgages for buy-to-let borrowers to choose from, and since then the availability of higher loan-to-value mortgages for landlords has also increased.

However, increased competition in the market is not translating to lower interest rates. Both the average two-year fixed rate, covering all LTV brackets, and the equivalent average five-year fixed rate have risen since December, reaching 2.92 per cent and 3.29 per cent respectively.

Rates actually dropped at the beginning of the first lockdown. Two-year fixed rates fell from 2.77% in March to 2.51% in May 2020, and for five-year fixes, well they dropped from 3.24% to just 2.94% in the same period.

Mortgage Advisor, Stephen Kerrigan said:

Following an overall increase of 158 since December, there are now 1,976 BTL products on offer, with growth being seen across nearly all the LTV tiers. ‘It is especially positive for landlords with lower levels of deposit or equity, as this growth has extended to the slightly higher-risk 80 per cent LTV bracket.

COVID-19 brings mixed fortunes for Landlords

In the months after Lockdown, landlords have been hit hard by tenants losing jobs and income. Around 840,000 private renters in England and Wales have built up rent arrears since the first Lockdown began in March 2020, and one in five tenants owe more than £1,000.

Faced with rising costs, many have also opted to put their properties into a company vehicle to avoid certain taxes.