The average rate on buy-to-let mortgages dipped slightly in June, improving the outlook for landlords who are set to remortgage or take out new loans.
While buy-to-let mortgages remain more expensive than they were in the aftermath of the government’s mini-Budget in autumn 2022, rates have recently fallen to almost their lowest level since they first began to climb.
The average rate now, as of 1st June, is 5.55%, which is slightly down on May’s 5.60% and reflects the growth in competition in the market among lenders. A number of lenders have announced new product ranges and incentivised offers in their buy-to-let mortgages over the past week, which is good news for landlords.
At their peak, average rates for buy-to-let mortgages hit 6.79% in August 2023, and the subsequent fall in rates has been consistent despite the fact that the Bank of England base rate has been held at 5.25% since the same month. This coincides with improving swap rates, and a strengthening economic outlook due to falling inflation and GDP growth.
The hope and expectation now is that the base rate will come down in the coming months, which will spur lenders on to offer even more competitive products and cheaper buy-to-let mortgages. In turn, this is expected to boost interest and appetite in the buy-to-let space among mortgaged buyers.
More buy-to-let mortgages on the market
There has been a healthy level of growth in the quantity of landlord mortgage deals on the shelves, as both high street lenders and specialist lenders have boosted their offering. However, landlords should consider more than just the rates, as some products come with other incentives that can benefit, such as free legal fees.
It is also important to look at what fees are being charged on each product, as these can sometimes outweigh the savings of lower overall rates. However, for some landlords, the certainty of a lower monthly payment may be appealing enough to merit the higher fee.
Of course, the current uncertainty within the political landscape may have a knock-on effect on the markets, meaning many do not expect any drastic changes in the lending space for the next couple of months. But the fact that the UK is within touching distance of its 2% inflation target is likely to be boosting market confidence overall.
High demand from tenants
One specialist lender that has recently launched a new offer for landlords seeking buy-to-let mortgages is Buy to Let by Foundation.
“At Foundation we’ll continue to explore a wide range of product options for landlords, whether for those who are close to the mainstream, those looking for more specialist finance, or those seeking to purchase or refinance more specialist property types.”
Whether you’re a first-time investor or an experienced landlord, BuyAssociation can help you secure your next UK property investment, while also offering you the expert advice of our independent partners. Get in touch for more information.
