Both two- and five-year fixed rate deals have seen average rates fall to more affordable levels after they hit a peak six months ago.
Indeed, back in August 2023 the average two-year fixed rate for buy-to-let mortgages was 6.88% according to Moneyfacts.
But fast forward to February, and a landlord looking for the same deal will pay, on average, 5.49%. This varies according to level of borrowing required with a two-year fix for a landlord with 20% deposit paying 1% more, typically, than someone with 40% of their own money to put down.
However, whatever your deposit – you will still find rates are more attractive than in the summer.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “This is positive news for borrowers who have been patiently waiting for fixed rates to come down.
“However, it is possible fixed rates will edge up slightly in the coming weeks due to volatile swap rates, so those looking to refinance may wish to secure a deal quickly to not be left disappointed.”
One area where this instability is beginning to surface is around product choice. Moneyfacts revealed the number of buy-to-let deals available was higher – by 250 – than it was six months ago.
However, it has also dropped in the last month.
Springall said: “The ebb and flow of deals makes it essential for prospective borrowers to seek advice to navigate the options available to them.
“Deeper analysis of product choice shows five-year fixed offers have waned month-on-month, but two-year fixed offers are resilient. It will be interesting to see how lenders adjust their ranges in the weeks to come. There are more two and five-year fixed mortgages now than there were six months ago.”
Today’s figures come just after Hampton’s released data showing rental growth on a newly let property across Great Britain rose 8.3% year-on-year – although, this was the slowest pace for 13 months.
Springall said: “Hamptons signalled that rental growth is expected to run ahead of inflation for the remainder of 2024.
“Still, there will be existing landlords concerned about the ongoing profitability of a buy-to-let portfolio as their margins have been impacted by a cull in mortgage rate tax relief, tax changes for CGT and holiday lets, plus new EPC requirements.”
| Buy-to-let market analysis – Source: Moneyfactscompare.co.uk | |||||
| Product numbers | Feb-22 | Feb-23 | Aug-23 | Jan-24 | Feb-24 |
| BTL product count (fixed and variable) | 3,540 | 2,246 | 2,585 | 3,114 | 2,838 |
| Two-year fixed rate BTL all LTVs | 1,146 | 539 | 676 | 968 | 972 |
| Two-year fixed rate BTL at 60% LTV | 111 | 90 | 67 | 72 | 70 |
| Two-year fixed rate BTL at 75% LTV | 469 | 271 | 328 | 416 | 420 |
| Two-year fixed rate BTL at 80% LTV | 149 | 63 | 67 | 108 | 120 |
| Five-year fixed rate BTL all LTVs | 1,336 | 865 | 1,107 | 1,324 | 1,215 |
| Five-year fixed rate BTL at 60% LTV | 126 | 103 | 79 | 83 | 73 |
| Five-year fixed rate BTL at 75% LTV | 578 | 412 | 558 | 639 | 588 |
| Five-year fixed rate BTL at 80% LTV | 176 | 56 | 76 | 102 | 129 |
| Average rates | Feb-22 | Feb-23 | Aug-23 | Jan-24 | Feb-24 |
| Two-year fixed rate BTL all LTVs | 2.90% | 5.95% | 6.88% | 5.95% | 5.49% |
| Two-year fixed rate BTL at 60% LTV | 2.07% | 5.55% | 6.64% | 5.63% | 5.22% |
| Two-year fixed rate BTL at 75% LTV | 2.86% | 5.95% | 6.87% | 5.94% | 5.51% |
| Two-year fixed rate BTL at 80% LTV | 3.82% | 6.89% | 7.54% | 6.65% | 6.30% |
| Five-year fixed rate BTL all LTVs | 3.16% | 5.85% | 6.72% | 5.91% | 5.48% |
| Five-year fixed rate BTL at 60% LTV | 2.33% | 5.37% | 6.18% | 5.37% | 4.87% |
| Five-year fixed rate BTL at 75% LTV | 3.14% | 5.95% | 6.76% | 5.94% | 5.51% |
| Five-year fixed rate BTL at 80% LTV | 4.03% | 6.86% | 7.29% | 6.65% | 6.20% |
| Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk | |||||
