Landlords face limited BTL mortgage choices as deals vanish

Landlords face limited BTL mortgage choices as deals vanish

0:05 AM, 31st May 2023, About 6 months ago

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Landlords searching for the perfect buy to let mortgage deal are in for a shock as growing numbers of lenders are pulling their products from the market, research reveals.

The latest analysis by found that dwindling options are available to both residential and buy-to-let borrowers, with a significant impact on average mortgage rates.

In the buy-to-let sector, fixed mortgage deals are disappearing quickly, leaving landlords grappling with rising average rates.

Renowned lenders including Precise Mortgages, Kensington, Kent Reliance and Marsden Building Society have recently withdrawn selected fixed BTL mortgage products.

However, Aldermore, Bank of Ireland UK, CHL Mortgages, Fleet Mortgages, Foundation Home Loans and The Mortgage Lender have gone a step further by pulling their entire fixed rate range.

‘Landlords will be disappointed to see a drop in product choice’

Rachel Springall, a finance expert at Moneyfactscompare, said: “Landlords will be disappointed to see a drop in product choice and that average fixed rates are on the rise.

“The volatility surrounding interest rates towards the tail end of 2022 started to improve, but as it stands, average rates are expected to keep climbing because of the ongoing concerns over future interest rate hikes.”

She added: “Buy-to-let product choice dropped below 1,000 deals in October last year, in the aftermath of the fiscal announcement, so it will be a concerning echo of that period if choice plummets to such a low again.

“Interest rates are only part of the decision-making process when entering a buy-to-let investment, so it is always wise to seek advice to ensure it is the right time to commit to a deal.”

Number of buy-to-let mortgages available has plummeted

Since the beginning of last week, the platform found that the number of buy-to-let mortgages available has plummeted from 2,748 deals to a meagre 2,343.

Consequently, the average rate on two- and five-year fixed BTL mortgages has surged to 5.61% and 5.52%, respectively.

Other lenders are also looking at their offerings with Virgin Money introducing alterations to various mortgage deals.

Its selected residential and buy-to-let fixed rates have rocketed by as much as 0.12%, while selected product transfer fixed rates have climbed by up to 0.10%.

Virgin Money is rolling out new fixed rates for BTL mortgages

Now, Virgin Money is rolling out new fixed rates for BTL mortgages at 50% and 60% LTV, accompanied by a £2,195 fee starting at 4.27%.

The lender is also withdrawing its buy-to-let tracker rates with a £3,995 fee.

Nationwide is another lender joining the trend and it has recently hiked rates for their new business offerings.

That will see two-, three-, five-, and 10-year fixed deals, along with two-year tracker products, being increased by up to 45 basis points, leaving potential borrowers with limited options and higher costs.

‘We’ve seen the first major lender significantly increase rates’

Rightmove’s mortgage expert, Matt Smith, said: “It’s early days, but we’ve seen the first major lender significantly increase rates and it’s likely that we’ll see other lenders follow suit, though the full impact may take a few weeks to filter through.

“An increase in fixed rates was likely to happen following the news earlier in the week that inflation had not fallen as much as markets had predicted.

“Subsequently, the underlying costs of mortgages to lenders has increased and it appears they’re now starting to pass this on through their fixed deals.”

He added: “We’ve seen average rates creep up from where they were earlier in the week, and we expect some further increases in the coming weeks.

“Though the upward trajectory of mortgage rates will understandably be concerning to those thinking of moving soon, it’s important to remember that right now rates are still lower than they were on average in February before edging down in March and April, and there are likely to be more twists and turns to come with the ongoing uncertainty over inflation.”

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