BTL landlords expand portfolios amid lower mortgage rates

BTL landlords expand portfolios amid lower mortgage rates

0:03 AM, 18th October 2024, About 2 months ago

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Falling buy to let mortgage rates have revitalised the UK’s landlord market, leading many to expand their property portfolios, research reveals.

Despite government reforms aimed at deterring investment in the sector, landlords are increasingly confident in their ability to weather the storm.

That’s the verdict from Octane Capital’s analysis which reveals that the average BTL mortgage rate has fallen from 5.99% in September 2023 to 4.33% in August.

With lower monthly mortgage repayments as a result, it becomes more affordable for landlords to own and manage rental properties.

Deter investment in the PRS

The firm’s chief executive, Jonathan Samuels, said: “Our new Labour government has shown early signs of intent with respect to rental market reforms, the majority of which are seemingly designed to further deter investment within the buy to let sector.

“Despite this, those intent on remaining within the sector are doing so with confidence, with landlords across the nation bolstering their portfolio sizes so far this year.”

He added: “This confidence has come following the greater degree of mortgage market certainty that has materialised following a hold on interest rates and, as a result, landlords are benefiting from reduced monthly mortgage costs.”

Average BTL mortgage

Octane‘s analysis shows that in December 2021, when interest rates first started to climb, the average BTL mortgage had a 1.70% rate.

That was a monthly interest only repayment of £286, and £827 for a full monthly repayment.

Fast forward to September last year – after 14 consecutive rate rises which saw the base rate climb to 5.25% – repayments are much higher.

It says that the full monthly mortgage repayment had risen to £1,382 – up 67%.

For those landlords with interest only repayments saw their month repayment increase by 274% to £1,071.

Average rate of a BTL mortgage

The data for August show that the average rate of a BTL mortgage has dropped to 4.33%, which is a full monthly repayment of £1,212, a 12% fall.

An interest only payment has fallen by 25% to £801.

Recent data from Pegasus Insight shows that landlords are becoming increasingly confident and the average portfolio size has risen from 7.2 to 7.6 this year.

This growth is particularly noticeable in regions like the East Midlands, where the average portfolio size increased by 2.5 properties.

For assistance with any type of buy to let (BTL), property or commercial finance please complete the contact form below:

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