Buy-to-let mortgage rates have fallen their lowest point since September 2022, according to new data from Moneyfactscompare.co.uk.
A typical two-year fixed rate for landlords is currently 4.88% which compares to 5.35% this time last year and is a far cry from September 2023’s average of 6.64%.
Meanwhile, landlords taking out a five-year fixed rate will find average rates have plunged from 6.49% in September 2023, to 5.33% last year to 5.21% today.
But despite the fact rates are at a three-year low and choice of deals has risen to a record high, landlords continue to face a barrage of challenges..
Along with the tax and regulatory changes landlords are already adjusting to, there has been speculation the Chancellor Rachel Reeves is considering applying National Insurance on rental income.
The Renters Rights Bill is also due to be enforced in law, a statute which will give more power to renters but will mean landlords will no longer be able to evict tenants without a reason and will have to ensure their properties meet higher standards.
So, whilst these reforms may overshadow the good news regarding rates, the fact prices are lower could prove a much-needed glimmer of hope for landlords.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “The cost of finance is a fundamental part of becoming a landlord, as tax changes over the years have led to a more challenging situation for investors to hit desirable profit margins.
“The speculation on more changes to hit private landlords in the upcoming Budget will also lead to more concerns. Those who do not have buy-to-lets held in a limited company could get hit if National Insurance Contributions (NICs) are levied on pre-mortgage profits.”
She explained for those landlords who locked into a fixed rate deal in 2023 and were due to refinance the average two-year fixed rate will now be lower than the one they fixed into previously.
“However,” she added, “uncertainties on the path of interest rates, and the changes to mortgage interest tax relief embedded by April 2020, meant some landlords would have grabbed a five-year fixed deal for peace of mind.
“In September 2020, the average five-year fixed rate was 3.20%, but today the difference in rate is around 2% more, at 5.21%.”
She added: “The path for landlords remains uncertain, as many will be struggling to keep up with legislation, which can come at a financial cost and time drain to keep up with changes.”
