Buy-to-let (BTL) mortgage choice has reached a record high after the number of landlord deals on offer rose to 3,560 in February, as experts say lenders work hard to attract new business.
Analysis of BTL product availability by Moneyfacts found that February’s deal choice was up 25% compared to the same month last year and, at 3,560, is at its highest point since the company’s records began in November 2011.
Five-year fixed rate choice continues to outnumber the availability of two-year deals. More than 1,550 five-year deals were on offer from lenders, up from 865 two years ago, compared to 1,244 two-year fixed rates, up from 539 in February 2023.
At the same time, two-year fixed rates have fallen over the past 12 months. The average two-year fix for all loan to values (LTVs) has reduced from 5.49% to 5.4%.
Broken down into LTV brackets, two-year fixed rates have fallen from:
- 5.22% to 4.87% at 60% LTV
- 5.51% to 5.36% at 75% LTV
- 6.3% to 5.98% at 80% LTV
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Month-on-month, however, two- and five-year average fixed rates have risen.
Market optimism
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Landlords searching for a new deal will find the choice of buy-to-let mortgages has hit a record high, which could instil a sense of optimism. Views are mixed on how the buy-to-let market will fare this year, but lenders are clearly working hard to attract new business, such as those launching new deals at higher loan-to-value ratios, and even deals created for a limited company.”
Landlords with a limited deposit or equity will find deals at 80% LTV have hit a record high, added Springall.
She said: “There are now 417 options, more than double the choice back in 2023; good news for those coming off a two-year fixed deal this year.
“However, the downside of the past few years has been volatile interest rates; thankfully, compared to 2023, buy-to-let mortgage rates are lower across two- and five-year fixed terms. However, if someone locked into a cheap deal back in 2020, they will be in for a shock this year when they come to refinance.
“Landlords will hope rates come down this year, but sticky inflation can delay further base rate cuts, and the swap rate market remains unpredictable.”
Meanwhile, average rental yields for landlords reached 6.93% in Q4 last year, the highest level since March 2011, according to Paragon Bank.
The bank said the improvement in average rental yields was a continuing trend, with yields growing since 2022.
