Buy-to-let mortgage rates edged up slightly but the choice of deals has improved in the last month, new data from Moneyfacts.co.uk has revealed.
The number of mortgages for landlords increased marginally by 39 deals but it comes following a huge monthly drop in product choice at the start of February. Moneyfacts said this showed signs of stability for buy-to-let mortgages.
When it comes to prices, Moneyfacts said average fixed rates over two- or five-year fixed terms rose month-on-month by a modest 0.01% for both. However, they have remained below 6% since the start of 2024.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said this stabilisation of buy-to-let product availability was a positive turn of events for landlords after recent months of contracting choice.
“Lenders will no doubt need to remain fluid with their product ranges and ensure they can react quickly to market uncertainty, such as volatility surrounding swap rates,” she said.
“Deeper analysis of product choice shows that lenders are now offering more two- and five-year fixed deals year-on-year, however, month-on-month the choice of two-year fixed deals fell slightly, but five-year options rose.”
Advice to landlords looking for buy-to-let mortgages in April 2024
For anyone looking to invest in a buy-to-let property in 2024, Moneyfacts said there are certainly opportunities but would-be landlords should be aware of additional costs and tax.
Moneyfacts flagged up figures from the Office for National Statistics (ONS) which showed the average UK private rent increased by 9.2% in the 12 months to March 2024, up from 9.0% in the 12 months to February 2024. This was the highest annual percentage change since the UK data series began in January 2015.
Springall said: “The potential returns from investing in buy-to-let may inspire borrowers to take the leap, but it is vital they seek advice to ensure it’s right for them. Indeed, the margin of profit from rental income may well be tighter than in previous years, due to several factors, including the cull of mortgage tax relief and the expense to cover EPC requirements.”
She added: “The cost to rent has been rising at a time when affordable housing is scarce. However, those looking to sell up this year may note house prices have fallen, plus landlords who sell will see a higher capital gains tax (CGT) bill than in previous tax-years, which could dampen the overall return on their original investment.”
