With high demand and low supply, the buy-to-let market is currently booming as an investment option.
As a result of this surge in demand, lenders are pulling out all stops to attract new buy-to-let borrowers.
According to research from comparison site Moneyfacts.co.uk, average rates have fallen dramatically since 2010, while the number of deals that have no arrangement fee have more than doubled in the past year.
Over the past five years, the average buy-to-let two-year fixed rate has fallen from 5.23% to 3.26%. Meanwhile, the average five-year fix has dropped from 6.12% to 4.06%.
In the past year alone, the number of buy-to-let deals without a fee has increased from 64 to 130.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “The BTL market is clearly booming; with rents at a high and BTL mortgage rates dropping to historic lows, there is great potential for prospective landlords.
“The finding that the average two-year fixed rate has fallen by 0.37% in just one year is particularly good news for older borrowers who are looking to access their pension pots to invest in bricks and mortar.
She warned that the new powers granted to the Bank of England to regulate the buy-to-let market could signal the end of these low-cost deals.
“Future legislative changes to the BTL market could also mean potential profits will fall, so investors need to keep an eye on any announcements to ensure BTL will still be profitable for them.
“The increase in deals with no fee is a sign that BTL lenders are trying to diversify and offer borrowers more choice than ever before. However, borrowers still need to weigh up the true cost of a mortgage to ensure the best deal is secured. Anyone thinking about entering this sector would be wise to seek the advice of an independent financial adviser to see if BTL really is the best place for their investment.”
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