In the realm of buy-to-let mortgages, recent analysis by Moneyfactscompare reveals a notable downturn in fixed rates, marking their lowest point since September 2022. This trend is evident across both two-year and five-year fixed terms, with average rates experiencing a consistent month-on-month decrease. The current figures represent the most affordable rates observed in over 18 months, showcasing a significant shift from the market conditions recorded just six months ago when these rates were documented as the highest in Moneyfacts’ electronic records, tracing back to November 2011.
This observed decline in fixed rates adds a layer of intrigue to the evolving landscape of the buy-to-let mortgage sector, hinting at potential advantages for investors and property owners seeking financial stability in their ventures. As market dynamics continue to influence these rates, staying informed about the ongoing trends becomes paramount for those navigating the intricate terrain of property financing.
The buy-to-let product landscape, encompassing both fixed and variable options, has undergone a decline in availability on a month-on-month basis. However, when comparing the current scenario to data from six months ago, there is a noteworthy increase of approximately 250 more options, revealing a dynamic and evolving market.
Rachel Springall, a finance expert at Moneyfacts, provides insights into the interest rate scenario, highlighting that landlords harboring concerns about these rates can find solace in the recent trend. Both average two- and five-year fixed buy-to-let rates have descended to their lowest points since September 2022. This stands in stark contrast to the situation just six months ago when these rates reached a record high. The dip in fixed rates presents positive news for borrowers who have patiently awaited a decrease in these rates to enhance their financial positions.
Despite this positive development, Springall points out a potential shift in the near future. There is a possibility that fixed rates may experience a slight upward trend in the coming weeks due to the inherent volatility of swap rates. This dynamic underscores the importance of swift decision-making for those considering refinancing, as securing a deal promptly becomes crucial in navigating the ever-changing currents of the buy-to-let mortgage landscape. Staying informed about these market nuances remains essential for individuals seeking optimal financial strategies in the realm of property investment.
Market volatility is evident in the fluctuating landscape of product choices, with an overall decline in count on a month-on-month basis. However, compared to six months ago, there is an upswing of approximately 250 deals, underscoring the importance for potential borrowers to seek advice in navigating the available options.
A closer examination of product choices reveals a dip in five-year fixed offers on a month-on-month basis, while two-year fixed offers remain resilient. The forthcoming weeks may shed light on how lenders adjust their ranges in response to these trends, with the current scenario indicating a greater availability of both two and five-year fixed mortgages compared to six months ago.
For those contemplating entry into the landlord arena, a study by Hamptons indicates an 8.3% year-on-year rise in rental growth for newly let properties across Great Britain, marking the slowest pace in 13 months. Despite this deceleration, Hamptons suggests that rental growth is anticipated to outpace inflation for the remainder of 2024, providing potential landlords with valuable insights into the evolving dynamics of the rental market.
Springall concludes: “Still, there will be existing landlords concerned about the ongoing profitability of a buy-to-let portfolio as their margins have been impacted by a cull in mortgage rate tax relief, tax changes for CGT and holiday lets, plus new EPC requirements. Any investor would be wise to seek advice before they commit, and providers will need to work hard to encourage borrowers to refinance and attract new business.”
