Buy-to-let rates have plummeted to all-time lows since the Bank of England cut interest rates last month, new research shows.
According to Moneyfacts.co.uk, the average fixed rate at 75% loan-to-value (LTV) has fallen by 0.49% in just six months to 3.96% and is the first time this rate has fallen below 4.00%.
The average 70% LTV has dropped from 4.38% six months ago to 3.96%, while the average 60% LTV rate has dropped from 3.73% to 3.48% over the last six months.
The Bank cut interest rates to a new record low of 0.25% in August as part of a range of measures designed to help boost demand following the vote to leave the EU.
It is the first interest rate cut since 2009, when the financial crisis was at its peak.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “With savings rates at record lows, many savers that once used their interest to supplement their income are looking elsewhere, and as bricks and mortar is often deemed a ‘safe bet’ many are looking at buy-to-let as an investment option.
“Whilst the costs of obtaining a buy-to-let mortgage are being driven down, there are other costs to factor in, such as the stamp duty surcharge that was introduced in April this year and the tax relief changes that are coming into play next year.
“As five-year fixed rates get ever lower, and with more calls for longer-term tenancy agreements, we could perhaps see a shift in the focus of the buy-to-let landlord whereby the investments become a more long-term prospect.
“Low rates may make a buy-to-let investment an attractive option, but borrowers should remember that a buy-to-let investment is not without its risks, so it is important for any potential landlords to seek financial advice to see if buy-to-let is the right option for them.”
