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Buy-to-let benefits from increased choice and competitive rates

Landlords are benefiting from an increased choice of buy-to-let products as more mortgages return to the market following the dip caused by the pandemic.

Data from showed, having plunged to a total of 1,455 products in May, the buy-to-let mortgage market has received a boost of 283 more products as lenders increase their ranges.

The two-year fixed rate market now has 134 more products and there are an additional 164 options in the five-year fixed rate sector than compared to the start of May.

However, things are still not as buoyant as they were before the Covid-19 crisis began in March, when there were 2,897 buy-to-let mortgages available.

Eleanor Williams, finance expert at Moneyfacts, said its latest research revealed the buy-to-let sector had adapted well to conditions caused by the pandemic and there were indications landlords may have cause for positivity.

“The latest Rental Index research from lettings platform Goodlord indicates that in June, new tenancy applications remained at 90% above 2019 levels,” Williams added.

“Subsequently, they have recorded increases in rental costs and also void periods reducing, as tenant demand for new properties remains strong now that the market has reopened.

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“This news should be a boost to landlords, who after a difficult few months can see that choice is beginning to return to their sector.”

Vote of confidence

Kevin Roberts, director, Legal & General Mortgage Club said the news more choice was returning to the market was a vote of confidence in the buy-to-let sector and a sure sign that it remained open for business.

He added: “At Legal & General Mortgage Club, our data even shows that despite the pandemic landlords still have a positive view of the buy-to-let sector.

“Nearly three in every five landlords (57%) told us that the crisis has had no impact on their plans to stay in the market and more than one in ten (16%) even have plans to buy more property over the coming months.”

Competitive rates

Moneyfacts data also showed rates were currently competitive, especially when compared to January.

The average rate for two-year fixed rate mortgages on 1 July was 0.21% less than at the start of the year, while the five-year fixed rate has fallen by 0.22% over the same time period.

Buy-to-let mortgage market analysis
Product numbersJan-20Mar-20Apr-20May-20Jul-20
BTL product count – fixed and variable rates2,5832,8971,8871,4551,738
Two-year fixed rates BTL – all LTVs823914610491625
Two-year fixed rates BTL – 80% LTV11914157931
Two-year fixed rates BTL – 60% LTV126124129148144
Five-year fixed rates BTL – all LTVs8791,000695480644
Five-year fixed rates BTL – 80% LTV11015069619
Five-year fixed rates BTL – 60% LTV128133140155146
Average RatesJan-20Mar-20Apr-20May-20Jul-20
BTL two-year fixed – all LTVs2.82%2.77%2.71%2.51%2.61%
 BTL two-year fixed – 80% LTV3.64%3.56%3.80%3.61%3.18%
 BTL two-year fixed – 60% LTV1.92%1.89%2.24%2.39%2.28%
BTL five-year fixed – all LTVs3.19%3.24%3.16%2.94%2.97%
 BTL five-year fixed – 80% LTV4.03%3.98%4.18%4.32%3.82%
 BTL five-year fixed – 60% LTV2.32%2.31%2.62%2.76%2.65%
Data shown is as at first working day of month, unless otherwise stated. Source:

By Kate Saines

Source: Mortgage Finance Gazette

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Buy-to-let products hit 12-year high! Is it time to plough into the rental market?

If you’re looking to get into the rental market, you may well find yourself spoilt for choice when shopping for a mortgage. According to price comparison expert Moneyfacts, there are some 2,162 buy-to-let products to choose from right now, the highest number since October 2007 when 3,305 mortgages were available.

Lenders are falling over themselves to grab a slice of buy-to-let despite the uncertainties created by the Brexit saga and the possible consequences of it on the British housing market. “It is encouraging that buy-to-let landlords have more mortgage choice than they have had at any time in almost 12 years,” Moneyfacts finance expert Darren Cook commented, noting that product numbers have jumped by 397 over the past year and by 706 since the same point in 2017.

Costs are rising Whilst competition might be on the up, the fight amongst the UK’s banks and building societies has not made investment in the rental market any more cost-effective for landlords. As Cook commented: “It is also evident from our research that heightened competition to try and attract buy-to-let business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector.”

The average rate for a two-year fixed-rate mortgage has edged both higher and lower over the past two years, but the current level of 3.12% stands at a premium to the 2.92% average seen around six months ago and the 2.96% witnessed in March 2018.

Meanwhile, the average rate on a five-year fixed-rate mortgage currently sits at 3.61%, up from 3.46% in September and 3.43% a year ago.

Dive in or stay away? Rising mortgage rates are the last thing that proprietors need right now because of the stream of tax changes in recent years that have pushed up the cost of owning and letting out property, from an increase on stamp duty to 3%, to axing tax relief which allowed mortgage interest to be subtracted from rental income before tax was calculated.

Bigger payments to HMRC aren’t the only problem, though. There’s a galaxy of certificates and therefore additional charges that proprietors need covering everything from maintenance to safety, to the listing and management of their properties, extra costs that all add up.

The government now has a huge appetite for restricting the activity of landlords through extra costs and tighter renting rules. It’s been identified as a critical vote winner given the ocean of Britons struggling to get onto the housing ladder as a result of the country’s huge property shortage. So if you grab a slice of buy-to-let, you’ll to be braced for investment here to get a lot more expensive, as well as restrictive, in the years ahead as government policy evolves.

What’s more, you’ll need to be prepared for Bank of England interest rate hikes, possibly as soon as later this year, and a subsequent increase in mortgage costs. A possible house price dip as we have seen in London over the past year or so could be on the horizon as well to smack the value of your investment portfolio. All things considered, I think buy-to-let is far too complicated and costly to participate in today, and I for one would rather use my money to invest elsewhere.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Source: Investing