BTL investors see a surge in product choice

BTL product choice has recovered from the market chaos that followed the mini-Budget in September with landlords and investors now seeing the number of buy to let mortgages available reaching levels not seen since August last year, research reveals.

The analysis by Moneyfacts.co.uk shows that BTL mortgage availability, both fixed and variable, has been improving month-on-month.

Last August there were 2,375 products available – and the market now has 2,400 options available.

Average fixed rates have fallen month-on-month

Moneyfacts also highlight that average fixed rates have fallen month-on-month, both over a two-year or five-year fixed term.

However, based on average rates, those coming off a five- or two-year fixed deal will find the latest rates are more than 2% higher.

Rachel Springall, the finance expert at Moneyfacts, said: “It is encouraging to see buy-to-let product choice gradually recover from the shock surrounding the fiscal announcement.

“The choice of deals to landlords plummeted and both the average two- and five-year fixed rates rose to 6% towards the tail end of 2022 but, thankfully, both rates have slowly dipped below this level.

“There are now 2,400 deals for landlords to choose from, up from just 988 in October 2022, thanks to consecutive months of growth.”

Landlords are worried about rental income margins

The reason for the increase is down to lenders wanting to attract new business, though landlords are worried about rental income margins.

Rachel says that the average two- and five-year fixed rates are sitting above 5%, compared to around 3% a year ago, which means that landlords are likely to see a higher-than-expected jump in their monthly repayments.

She added: “There may even be those looking to sell up this year because of the rise in interest rates, tax changes for holiday lets and CGT or even EPC requirements – all of which dampen profit margins or investment returns on the sale of a property.

“Landlords may be waiting for fixed mortgage rates to come down further or indeed opt for a tracker mortgage to give them more flexibility to eventually switch their deal.”