Landlord News

BTL mortgage rates cut to boost market

Ryan - April 15, 2016

Mortgage lenders are cutting rates on products intended for buy-to-let landlords in a bid to give the market a boost in the wake of the stamp duty deadline passing.

Cuts

Comparison website Moneyfacts says that the average two-year fixed buy-to-let mortgage rate currently stands at 3.32%. This is down on the 3.59% recorded at the same time last year and substantially lower than the 4.03% average shown in April 2014.

The average five-year fixed rate deal for buy-to-let landlords is presently 4.0%, in comparison to 4.37% in April 2015 and 4.76% two years ago.

Charlotte Nelson, a spokeswoman for Moneyfacts, said, ‘while the new tax rules and stamp duty changes could potentially take the shine off buy-to-let investment, property is often seen as a safe bet and with rental properties in demand and rent high, buy-to-let remains an attractive proposition.’[1]

‘A year on from pension freedoms, almost £3bn has been paid out in cash lump sum withdrawals, so it’s highly likely that some of this money has been accessed with buy-to-let in mind,’ she added.[1]

BTL mortgage rates cut to boost market

BTL mortgage rates cut to boost market

Downwards

Analysts from Moneyfacts have noted that savings rates are so low that many retirees investing in buy-to-let following changes to pension rules are starting to look elsewhere. A separate investigation underlines how the majority of retiree landlords are dependent on their rental income.

Lenders are keen to avoid this group of investors to consider their options, therefore are offering some of the best rates the sector has witnessed. What’s more, rates were already low in the run up to the stamp duty changes, which has further aided the downward spiral of rents.

Concluding, Nelson said, ‘while the current pressures on the market are not yet causing rates to rise, borrowers should remember that they will now be facing tighter lending rules, including stricter affordability checks, so it is even more important for potential to seek financial advice to see if buy to let really is the right option for them.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/lenders-try-to-bolster-flagging-buy-to-let-market