While the tax and rule changes imposed on the buy to let sector over the last few years have heightened the pressures felt by landlords, they now have more choice when it comes to mortgages, new research has found.
Indeed, the number of buy to let mortgages is currently 2,163, the highest since before the financial crisis hit in October 2007, according to research from Moneyfacts.co.uk.
But some rates have increased. In March 2017 the average two year fixed rate was 2.96% and that has now gone up to 3.12% following the Bank of England rate rise last year. The average five year fixed rate in March 2017 was 3.77% and but that has now fallen slightly to 3.61%.
‘It is encouraging that buy to let landlords have more mortgage choice than they have had at any time in almost 12 years. Total product numbers have increased by 397 over the past year and by 706 over the past two years,’ said Darren Cook, finance expert at Moneyfacts.co.uk.
‘Despite ongoing uncertainty in the property market, providers are not shying away from offering landlords a greater choice of products, although it is also evident from our research that heightened competition to try and attract buy to let business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector,’ he explained.
‘Indeed, the average two year fixed buy to let mortgage rate has increased by 0.20% to 3.12% since September 2018 and the average five year fixed rate has increased by 0.15% over the same period,’ he added.
He pointed out that as there appears to have been no sustained increases in interest SWAP rates since September 2018, a strong argument can be made that the recent increases to buy to let mortgages interest rates have been a result of mortgage providers attributing a little more to risk into their product rates due to uncertainty over future economic conditions.
‘The disparity in the direction of movement between buy to let and residential interest rates may be due to the way these two types of lending are primarily assessed. Buy to let mortgage providers generally consider the potential rental income and affordability during assessment, whereas residential mortgage providers typically look back at income earned by the borrower and affordability,’ he concluded.
