Boost for Buy To Let as mortgage product choice impro...

There's good news for the buy to let sector as mortgage product availability is showing signs of stability, according to the independent Moneyfactscompare site.

Overall buy to let product availability (fixed and variable) rose month-on-month, albeit marginally by 39 deals.

This comes after a reduction in choice of 276 deals between the start of 2024 and the beginning of February, which was the biggest monthly drop since June 2023. Product choice is higher year-on-year, but it was last higher at the start of 2024 (3,114). Deeper analysis shows a month-on-month rise of 47 five-year fixed deals, but a fall of 19 in the choice of two-year fixed deals. However, product choice is up year-on-year for each sector.

Average fixed rates over two- or five-year fixed terms rose month-on-month by a modest 0.01% for both and have remained below 6% since the start of 2024.

Buy-to-let market analysis
Product numbers	Apr-22	Apr-23	Oct-23	Mar-24	Apr-24
BTL product count (fixed and variable)	3,435	2,628	2,581	2,844	2,883
Two-year fixed rate BTL all LTVs	1,052	716	773	966	947
Two-year fixed rate BTL at 60% LTV	105	89	67	76	72
Two-year fixed rate BTL at 75% LTV	455	350	379	416	398
Two-year fixed rate BTL at 80% LTV	150	83	97	133	136
Five-year fixed rate BTL all LTVs	1,279	1,034	1,136	1,223	1,270
Five-year fixed rate BTL at 60% LTV	117	101	81	78	81
Five-year fixed rate BTL at 75% LTV	584	492	613	586	574
Five-year fixed rate BTL at 80% LTV	183	75	85	135	141
Average rates	Apr-22	Apr-23	Oct-23	Mar-24	Apr-24
Two-year fixed rate BTL all LTVs	3.22%	5.64%	6.40%	5.51%	5.52%
Two-year fixed rate BTL at 60% LTV	2.50%	5.27%	6.09%	5.22%	5.21%
Two-year fixed rate BTL at 75% LTV	3.15%	5.63%	6.40%	5.53%	5.56%
Two-year fixed rate BTL at 80% LTV	3.89%	6.43%	6.95%	6.24%	6.22%
Five-year fixed rate BTL all LTVs	3.42%	5.61%	6.32%	5.51%	5.52%
Five-year fixed rate BTL at 60% LTV	2.70%	5.07%	5.70%	4.84%	4.81%
Five-year fixed rate BTL at 75% LTV	3.37%	5.67%	6.36%	5.53%	5.54%
Five-year fixed rate BTL at 80% LTV	4.04%	6.54%	6.84%	6.18%	6.19%
Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.

Moneyfacts mortgage expert Rachel Springall says: “The stabilisation of buy-to-let product availability is a positive turn of events for landlords after recent months of contracting choice. Lenders will not doubt need to remain fluid with their product ranges and ensure they can react quickly to market uncertainty, such as volatility surrounding swap rates. Deeper analysis of product choice shows that lenders are now offering more two- and five-year fixed deals year-on-year, however, month-on-month the choice of two-year fixed deals fell slightly, but five-year options rose.

“Landlords with a limited deposit or equity will find a growing pool of products at 80% loan-to-value, with deals over two- and five-year fixed rising month-on-month, and up year-on-year. This improvement in choice should be welcomed, but the real challenge surrounds affordability where both the average two- and five-year fixed rates at 80% loan-to-value remain above 6%. However, looking at the overall average rates, both have managed to remain below 6% throughout 2024 so far.

“The potential returns from investing in buy-to-let may inspire borrowers to take the leap, but it is vital they seek advice to ensure it’s right for them. Indeed, the margin of profit from rental income may well be tighter than in previous years, due to several factors, including the cull of mortgage tax relief and the expense to cover EPC requirements.

"The cost to rent has been rising at a time when affordable housing is scarce. Recent figures from the Office for National Statistics (ONS) show that average UK private rent increased by 9.2% in the 12 months to March 2024, up from 9.0% in the 12 months to February 2024, representing the highest annual percentage change since the UK data series began in January 2015. However, those looking to sell up this year may note house prices have fallen, plus landlords who sell will see a higher CGT bill than in previous tax-years, which could dampen the overall return on their original investment.”