Record number of buy-to-let mortgage deals as average two-year rates drop below 5% for first time since 2022
The total number of buy-to-let deals across the market has reached 4,144, according to rates scrutineer, Moneyfacts.
This is the highest count on record since it began tracking buy-to-let deals in November 2011.
The number of buy-to-let deals has almost doubled since June 2023 and there has been a 42 per cent increase since this time last year, when there were 2,935 deals available.
With competition between lenders on an upward trajectory, mortgage rates have also fallen over the past year.
Moneyfacts says the average two-year fixed rate buy-to-let deal has dropped below 5 per cent for the first time since September 2022.
Investors looking to buy or remortgage with a 25 per cent deposit or equity stake can now get an average two-year fix at 4.96 per cent compared to 5.59 per cent this time last year.
On a £200,000 interest only mortgage, that's the difference between paying £826 a month and £932 a month.
Those with a 40 per cent deposit or equity stake can secure 4.46 per cent on average, according to Moneyfacts, down from 5.25 per cent this time last year.
On a £200,000 interest only mortgage, that's the difference between paying £743 a month and £875.
It's a similar story for those looking to fix for five years, albeit not quite as extreme.
The average five-year fix for those buying or remortgaging with a 40 per cent deposit or equity stake is now 4.51 per cent, down from 4.93 per cent a year ago.
Rachel Springall, finance expert at Moneyfacts thinks landlords should benefit from the rise in available deals.
'Both the two- and five-year fixed rates have fallen for the fourth consecutive month,' says Springall.
'The average five-year fixed buy-to-let rate is now at its lowest level in over six months, but year-on-year the rate has not dropped as viciously as its two-year counterpart.
'Lenders monitor swap rates to gauge future rate expectations, and when they drop it encourages mortgage rate cuts.
'Lower buy-to-let rates might create a positive sentiment for new and existing landlords, however, there will be immense pressure on some to turn around a profit in the future.'
What are the best rates?
Many of the lowest buy-to-let mortgage rates come with staggeringly high fees. These can be as high as 10 per cent of the total mortgage amount in some cases.
On a £200,000 mortgage that would equate to £20,000.
This means it's essential for landlords to look at the overall cost of the mortgage and factor in both the fees and the interest rate.
While buy-to-let rates have improved on average compared to last year, many investors will find they can now secure rates below 4.5 per cent and do so without incurring massive product fees.
For example, a landlord remortgaging to a five-year fix with at least 40 per cent equity in the property can get 4.28 per cent with NatWest, with a £59 fee or 4.29 per cent with HSBC with no fee.
A £200,000 mortgage fixed at 4.29 per cent on an interest only basis would cost £716 a month.
The best two-year fixed rates are slightly more expensive, but only marginally.
A slight quirk in the market is that there is little difference at present between the best rates for those buying with or remortgaging with 25 per cent deposits or equity and those doing so with 40 per cent.
For example, HSBC is offering those remortgaging at 75 per cent loan-to-value the chance to fix for five years at 3.94 per cent, albeit with a £3,999 fee attached.
The lender is also offering a £1,999 fee option with a rate of 4.19 per cent.
How to find a new mortgage
Borrowers who need a mortgage because their current fixed rate deal is ending, or they are buying a home, should explore their options as soon as possible.
Buy-to-let landlords should also act as soon as they can.
Quick mortgage finder links with This is Money's partner L&C
> Mortgage rates calculator
> Find the right mortgage for you
What if I need to remortgage?
Borrowers should compare rates, speak to a mortgage broker and be prepared to act.
Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it.
Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying expensive arrangement fees.
Keep in mind that by doing this and not clearing the fee on completion, interest will be paid on the fee amount over the entire term of the loan, so this may not be the best option for everyone.
What if I am buying a home?
Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be.
Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people's borrowing ability and buying power.
What about buy-to-let landlords
Buy-to-let landlords with interest-only mortgages will see a greater jump in monthly costs than homeowners on residential mortgages.
This makes remortgaging in plenty of time essential and our partner L&C can help with buy-to-let mortgages too.
How to compare mortgage costs
The best way to compare mortgage costs and find the right deal for you is to speak to a broker.
This is Money has a long-standing partnership with fee-free broker L&C, to provide you with fee-free expert mortgage advice.
Interested in seeing today's best mortgage rates? Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.
If you're ready to find your next mortgage, why not use L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
> Find your best mortgage deal with This is Money and L&C
Be aware that rates can change quickly, however, and so if you need a mortgage or want to compare rates, speak to L&C as soon as possible, so they can help you find the right mortgage for you.
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