The average two-year BTL fixed rate is lower now compared to 2019

The average two-year BTL fixed rate is lower now compared to 2019

9:43 AM, 5th July 2021, About 4 weeks ago

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Buy to Let Landlords will be pleased to see a rise in product choice if they are looking to invest or change their existing mortgage deal. The latest data from Moneyfacts.co.uk also highlights the average two-year fixed rate is lower now compared to 2019 – so there may be investors coming off a two-year fixed deal who may even find better rates now.

At 2,709 products, we began July with the highest number of options on offer in the buy-to-let sector since March 2020 (2,897), 971 products higher than this time last year when availability was limited after swathes of product withdrawals following the onset of the pandemic.

The average overall two and five-year fixed BTL rates have fallen when compared to July 2019 – good news for those looking to remortgage – however year-on-year both the two- and five-year fixed average rates for all LTVs are in fact up 0.37% and 0.31% respectively.

Landlords with 40% equity or deposit will find that even though their level of product choice is lower than it was this time last year, they are amongst those who might be able to secure a competitive new deal as the average two- and five-year fixed rates in this bracket both remain 0.03% lower year-on-year.

Buy-to-let mortgage market analysis
Product numbers Jul-19 Jul-20 Jun-21 Jul-21
BTL product count – fixed and variable rates 2,344 1,738 2,486 2,709
All 80% LTV BTL products – fixed and variable rates 212 77 147 198
All 75% LTV BTL products – fixed and variable rates 971 616 884 952
All 60% LTV BTL products – fixed and variable rates 342 414 341 340
Average rates Jul-19 Jul-20 Jun-21 Jul-21
BTL two-year fixed – all LTVs 3.01% 2.61% 2.96% 2.98%
BTL two-year fixed – 80% LTV 3.75% 3.18% 4.20% 3.94%
BTL two-year fixed – 75% LTV 3.02% 2.72% 3.01% 3.01%
BTL two-year fixed – 60% LTV 2.07% 2.28% 2.28% 2.25%
BTL five-year fixed – all LTVs 3.50% 2.97% 3.31% 3.28%
BTL five-year fixed – 80% LTV 4.14% 3.82% 4.34% 4.15%
BTL five-year fixed – 75% LTV 3.51% 3.14% 3.42% 3.36%
BTL five-year fixed – 60% LTV 2.51% 2.65% 2.64% 2.62%
Data shown is as at first working day of month, unless otherwise stated.  Source: Moneyfacts.co.uk

Eleanor Williams, Finance Expert at Moneyfacts.co.uk, said:

“Landlords now have the highest level of product choice that we have recorded in over a year. At 2,709 the number of products available to investors is far more than the choice they were faced with this time last year, but perhaps even more interesting is that there are 365 deals more available now than we recorded in July 2019, demonstrating the strength and resilience of this sector in the aftermath of an unprecedented 18-months.

“The demand for buy-to-let could well remain strong in the months to come as rental demand is prevalent, indicated by recent research from Propertymark’s Private Rented Sector report, May saw a record-breaking number of new prospective tenants registered. Whether now is the right time to invest in property may also come down to the desire to earn a decent income. Indeed, research from Nottingham Building Society revealed that 61% of landlords surveyed felt property was a better investment due to low-interest rates for savings – and this coupled with high demand for rental accommodation could sway new investors to dive into the buy-to-let sector.

“Due to the influence of the pandemic, interest rates for buy-to-let have climbed year-on-year with the overall two- and five-year average interest rates of 2.98% and 3.28% being 0.37% and 0.31% higher respectively than a year ago, but this may be linked to the increase in availability of higher loan-to-value products. These higher LTV deals usually charge a higher rate and can therefore impact these averages. However, despite creeping up a further 0.02% month-on-month, what is positive is the fact that the overall two-year fixed rate is lower now than in June 2019 – which means those coming off a two-year fixed deal may still find a better deal, depending on how much they have in equity and their circumstances.

“There could still be some understandable hesitation from prospective landlords with some existing investors who could even be considering downsizing their portfolio depending on the pandemic’s impact. However, we are beginning to see some improvements in average rates in certain loan-to-value brackets on a month-on-month basis. As house prices rise, demand for rental accommodation is high, and savings rates remain poor, therefore, investing in property could be enticing to some. It is vital though that would-be landlords and those looking to change their deal seek advice to ensure it’s the right time for them and they find the best package for their circumstances and plans.”

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