Landlords looking for a two-year fixed rate mortgage will find prices have fallen in the last year, according to new data from Moneyfactscompare.co.uk.
The typical rate for a two-year fixed buy-to-let mortgage has fallen from 5.95% in February 2023, to 5.49% in February 2024 to 5.40% today.
Meanwhile, average five-year fixed rates have increased slightly in the last year from 5.48% to 5.56% today.
The new data on the buy-to-let mortgage market also shows the availability of mortgages for landlords has increased to a record high.
The number of fixed and variable mortgages deals has hit 3,560 – the highest count on Moneyfactscompare’s electronic records.
In the last month five-year fixed deals have increased by 92 meaning there are now 1,571 on the market. There was a rise of 114 two-year fixed deals lifting the availability up to 1,244.
Whilst the increase in choice, along with the dip in two-year fixed rates, will come as good news to landlords – the cost of borrowing is still far higher than many property owners will be used to.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Views are mixed on how the buy-to-let market will fare this year, but lenders are clearly working hard to attract new business, such as those launching new deals at higher loan-to-value ratios, and even deals created for a limited company.
“Diving into the overall choice of buy-to-let mortgages shows there are still more deals with a fixed term of five years, versus two years, and both counts are at record highs. Five-year fixed buy-to-let mortgages have been in more abundance than their two-year counterparts since June 2020.”
Advice for landlords remortgaging
For landlords due to remortgage, having nearly finished a two-year deal, the fact there is more choice today will be good news. But for those nearing the end of a five-year fixed rate, secured in 2020 before the mortgage rate hikes, pricing may be more of an issue.
Springall added: “The downside of the past few years has been volatile interest rates; thankfully, compared to 2023, buy-to-let mortgage rates are lower, across two- and five-year fixed terms. However, if someone locked into a cheap deal back in 2020, they will be in for a shock this year when they come to refinance.
“Landlords will hope rates come down this year, but sticky inflation can delay further base rate cuts, and the swap rate market remains unpredictable.”
“Affordable housing remains in short supply, so demand for rental properties continues. However, rising costs are taking their toll on prospective landlords.”
She added: “Both new and existing landlords would be wise to seek advice to assess the latest deals available to them and if it’s still viable to retain their portfolio.”
