Finding our footing in a changing BTL market – Armstrong

While wider economic and geopolitical factors continue to influence mortgage pricing, there are some encouraging signs, with rates beginning to ease as lender competition increases and swap rates soften. 

Lower rates and improved affordability should support activity over time, but political uncertainty and the run-up to the Budget are likely to keep households and investors cautious. For landlords, this is also influencing product choice, with two-year fixes becoming more attractive as they balance flexibility with the potential for further rate movement. 

Recent activity suggests this shift is already underway. Meanwhile, the market remains selective, with activity driven by motivated buyers and sellers, and early signs that the Renters’ Rights Act could lead to fewer, but potentially larger, rent increases as landlords adjust. 

Against that backdrop, it’s been another busy few weeks for rate reductions in particular. 

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Improvements to BTL pricing 

Barclays has announced a raft of rate reductions across its BTL range, with the biggest cuts to remortgage products including a two-year fixed up to 75% loan to value (LTV) with zero product fees and a max loan of £1m that has been reduced by 0.4% (from 5.5% to 5.1%). 

Within its BTL purchase-only reductions, a five-year fixed up to 60% LTV with an £899 product fee and max loan of £1m has been reduced by 0.36% (from 5.05% to 4.69%). These form part of the wider selection of reductions announced. 

Dudley Building Society’s recent rate reductions cover residential, BTL and expat products. These include a five-year fixed BTL product at 80% LTV that has been reduced from 6.4% to 5.63%, for purchase or remortgage, with a £1,499 arrangement fee and £1m max loan, and a five-year fixed BTL expat product at 70% that has been reduced from 6.3% to 5.68%. This is a purchase or remortgage product, with a £1,999 arrangement fee and £1m max loan. 

Landbay has decreased rates by up to 0.17% on selected Premier products, including product transfers. A Premier five-year fixed up to 75% with 0% fee has been reduced from 5.62% to 5.45%, available for both individuals and limited companies, with a £2m max loan, while a Premier five-year fixed product transfer up to 75% LTV with a 1% fee has been reduced from 5.48% to 5.34%, available for both individuals and limited companies, and a max loan of £2m. 

Zephyr Homeloans has reduced all its fixed rates by 15 basis points (bps). In its Special Edition Range, a two-year fixed up to 75% LTV with a product fee of 5% is now available at 3.69% on a standard property (max loan £1.5m). Pricing on small house in multiple occupation (HMO) and multi-unit freehold block (MUFB) properties in the same range starts at 3.84% up to 75% with a 5% product fee and a max loan of £1.5m, while large HMOs/MUFBs start at 4.09% with a 5% product fee. 

Early in the month, we saw Accord Mortgages announce reductions of up to 0.3% on two-year fixed rates in its BTL new business range. Three-year fixed rates were reduced by up to 0.25% and five-year fixed rates by up to 0.22% respectively. A two-year fixed is now priced at 4.45% up to 60% LTV with a product fee of £3,495. This comes with £250 cashback and a free standard valuation. The max loan is £1.5m. 

Saffron Building Society has launched a 70% LTV limited company BTL product. The five-year fixed product is available at 5.47% with a £2,500 fee. Also launched is a 5.57% five-year fixed that is being offered with a 1.5% fee, also up to 70% LTV. In both cases, the maximum 70% LTV is inclusive of fees. Further recent enhancements by Saffron include accepting new-build flats up to 75% LTV on an interest-only basis, previously capped at 60% LTV, and announcing that no personal guarantees are required for limited company borrowing up to 55% LTV. 

CHL Mortgages has launched some limited-edition products this month alongside rate reductions of 30bps across its short-term let range. The new products are priced from 2.7% for single dwelling properties, a two-year fix up to 75% LTV and with a 7% fee, and from 2.8% for HMO/MUFB properties, also two-year fixed, up to 75% LTV with a 7% fee. Following the rate reductions, the short-term let range now starts from 3.16% at 65% LTV with a 7% fee and offers LTVs up to 80% plus a choice of fee options.

In a final bit of criteria news, Castle Trust Bank has enhanced its BTL proposition with the introduction of automated valuation models (AVMs) on eligible cases. Designed to reduce delays and streamline the customer journey, the use of AVMs will be available on standard residential properties, including houses and single flats, with a value of up to £750,000 and a maximum LTV of 65%.