BTL product choice at highest level since Credit CrisisMake Text Bigger
Moneyfacts UK Mortgage Trends Treasury Report data, not yet published, shows that the number of Buy to Let (BTL) products available, currently 2,396 products, is the highest on record since the beginnings of the financial crisis in October 2007, when the total number of available products stood at 3,305. Since June 2018, the total number of available BTL products has increased by 21%, and in the past month alone it has risen by 143 products, from 2,253 to 2,396.
Meanwhile, average BTL mortgage rates have also risen over the past 12 months, with the average two-year BTL fixed rate mortgage increasing by 0.17% from 2.88% in June 2018 to 3.05% this month, while the average five-year BTL fixed rate has risen by 0.11% to stand at 3.54% (June 2018: 3.43%). Both rates still stand significantly lower than in October 2007 however, when the average two-year BTL fixed rate stood at 6.36% while its five-year counterpart stood at 6.39%.
Darren Cook, Finance Expert at Moneyfacts, said: “The BTL market has experienced a number of regulatory changes during recent years, however, it seems that product competition within this specialised mortgage area is continuing to grow. A 21% increase in availability to 2,396 products over the past 12 months indicates that providers are keen to offer potential BTL investors plenty of choice within the sector.
“Despite this increasing competition in terms of the total number of products available over the past year, average rates have unfortunately not fallen, and have instead followed suit, with the average two-year fixed rate increasing by 0.17% to 3.05% and the average five-year fixed rate increasing by 0.11% to 3.54% over the same period.
“The largest concentration of BTL product choice can be found at the maximum 75% loan-to-value (LTV) tier, where there are currently 352 (44%) two-year fixed rate products available and 374 (48%) five-year fixed rate products available. Coincidently, the average fixed rates at the 75% LTV tier for the two and five-year sectors are currently 3.05% and 3.55% respectively, equalling or near-equalling the average rates for both terms across all tiers.
“The increase in the BTL average rates contrasts with the downward trajectory of their residential mortgage counterparts, where product competition seems to have instead resulted in rates falling. This disparity in trends is likely to be attributed to the different approach lenders take to risk between these two sectors, and that economic uncertainty may be having a more adverse influence on the BTL mortgage market than it is having on the residential mortgage market.”
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