Product availability, however, declines over the past month
Buy-to-let fixed rates in the UK has dropped significantly over the past months, reaching their lowest levels since September 2022, according to Moneyfactscompare.co.uk.
Latest data analysis from the price comparison site indicates that average fixed rates for both two- and five-year terms have decreased month-on-month – a stark contrast to the record high rates observed just six months ago, when rates were the highest since the electronic records of Moneyfacts began in November 2011.
Despite the decrease in rates, the overall product availability for buy-to-let mortgages, encompassing both fixed and variable types, has seen a decline over the past month. However, when compared to the situation six months earlier, there has been an increase of approximately 250 options for borrowers.
Rachel Springall (pictured), finance expert at Moneyfactscompare.co.uk, noted the positive shift for landlords worried about interest rates, with significant reductions in both the two- and five-year fixes.
She, however, did not rule out the potential for slight increases in fixed rates in the near future due to fluctuating swap rates, advising those considering refinancing to act swiftly to secure favourable deals.
“A notable area of volatility in the market has surrounded product choice; the overall count has dropped month-on-month, but availability is up by around 250 deals compared to six months ago,” Springall said. “The ebb and flow of deals makes it essential for prospective borrowers to seek advice to navigate the options available to them.
“Deeper analysis of product choice shows five-year fixed offers have waned month-on-month, but two-year fixed offers are resilient. It will be interesting to see how lenders adjust their ranges in the weeks to come. There are more two- and five-year fixed mortgages now than there were six months ago.”
Springall referenced a study by Hamptons, indicating an 8.3% year-on-year increase in rental growth for newly let properties across Great Britain, albeit at the slowest pace in 13 months. Despite this slowdown, Hamptons anticipates rental growth to outpace inflation for the remainder of 2024.
“Still, there will be existing landlords concerned about the ongoing profitability of a buy-to-let portfolio as their margins have been impacted by a cull in mortgage rate tax relief, tax changes for CGT and holiday lets, plus new EPC requirements,” she said. “Any investor would be wise to seek advice before they commit, and providers will need to work hard to encourage borrowers to refinance and attract new business.”
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