Although the Bank of England has held its base rate steady, lenders are getting ahead of the competition leading to falling buy-to-let mortgage rates.
The UK rental market remains an extremely busy and fast-paced sector, with landlords continuing to experience extremely high demand for their properties from tenants due to a high population of renters. While major cities remain the main hub of activity, commuter towns are increasingly seeing rising demand from tenants.
While mortgage costs for landlords have undoubtedly increased over the past couple of years as rates have crept up, alongside inflation, so too have rental incomes and yields as a result of a supply and demand imbalance in the market.
However, in recent days, buy-to-let mortgage rates have begun to improve once more for landlords, as lenders compete to offer more enticing products for both existing and prospective new borrowers. This is improving the outlook for investors and landlords looking for new products at the moment.
Buy-to-let mortgage rates down this week
One prominent lender reducing its buy-to-let mortgage rates this week is The Mortgage Works, a specialist lender that is often one of the most competitive in the market.
From today, it is introducing buy-to-let mortgage products for new customers starting at 3.49%, with rates being reduced across some products by up to 0.35%.
For example, the new two-year fixed rate for purchase and remortgage is now 3.99% with a £3,995 fee, for loan-to-value of up to 65%, which is down 0.35%. For buyers and remortgage customers looking for a five-year rate, this has been reduced by 0.10% to 3.69% with a 3%, up to 65% LTV.
Joe Avarne, senior manager, buy-to-let mortgages at The Mortgage Works, said: “With rates starting from 3.49%, these latest reductions from The Mortgage Works will help widen market access for buy-to-let investors.”
Another big high street name, NatWest, has also cut its buy-to-let mortgage offering by up to 6-bps. It is now offering a two-year fixed rate of 4.16% with a £3,499 fee for LTVs from 75%. At 60% LTV, borrowers can secure rates from 3.69% with a £3,499 fee.
NatWest is offering a five-year buy-to-let mortgage purchase deal of 4.28% at 60% LTV, or 4.32% at 75% LTV with a £995 fee. This is a reduction of up to 32bps.
Among the other lenders to have dropped its buy-to-let mortgage rates this week is LendInvest Mortgages, which has launched its lowest rates of the year, now starting at 3.44%. Its products are aimed at a range of customers, from first-time landlords to experienced portfolio managers who are expanding.
Sophie Mitchell-Charman, commercial director at LendInvest, commented: “We understand how important competitive rates are for landlords, whether they’re looking to expand their portfolios or maximise returns on existing properties.
“In today’s market, flexibility and affordability are key, and this rate cut is a direct response to those needs. By offering some of the lowest buy-to-let rates on the market, we’re making it easier for landlords to access financing that fits their specific investment strategies.
“This move is a testament to our ongoing commitment to providing market-leading products, underpinned by innovation and customer-centricity, to ensure we remain a top choice for property investors across the UK.”
HMO options
Houses in multiple occupation (HMOs) have increased in popularity for landlords in recent years due to their high yields, as well as the changing habits and preferences of tenants which has caused a resurgence in popularity for high-end HMOs in desirable locations.
One specialist lender, Zephyr Homeloans, has announced reductions this week on a range of its offerings, including buy-to-let mortgages for HMOs and multi-unit freehold blocks (MUFBs). It offers deals specifically for energy efficient properties with energy performance certificate (EPC) ratings of A-C, with rates starting from 3.24%.
Paul Fryers, managing director at Zephyr Homeloans, commented: “We’re very pleased to provide further reductions in the current dynamic market on deals that will enable brokers to source the best mortgage to suit their landlord clients’ needs.”
Green mortgages are increasingly being offered by lenders as part of the drive towards improving the energy efficiency of rental homes, which has once again become a priority for many landlords and property investors since Labour announced that a new benchmark would be introduced to the sector.
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