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Five-year buy-to-let rates return to record lows

  • 05/03/2018
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Five-year buy-to-let rates return to record lows
Average buy-to-let (BTL) five-year fixed rates have fallen from 3.77% in March last year to 3.43% in March 2018, as lenders try to attract landlords coming off their two-year deals.


Buy-to-let rates are now at record low levels last seen in October 2017.

According to Moneyfacts, which compiled the data, the low rates are an attempt to attract those borrowers who are now looking to remortgage, after taking out two-year fixes in 2016 to avoid the extra 3% stamp duty surcharge on BTL properties.

“Many borrowers rushed to make purchases in the first few months of 2016, to beat the stamp duty hike,” said Charlotte Nelson, finance expert at Moneyfacts.

Indeed, March 2016 recorded a sharp increase in the purchase of BTL homes, according to UK Finance data.

Nelson continued: “Because of this, a substantial chunk of borrowers is likely to be remortgaging in the coming months.”

“In anticipation, lenders have started to compete in the five-year fixed rate market to vie for these potential borrowers’ custom.

“This has seen the average five-year fixed rate fall to the joint lowest on records.”


The popular choice

Nelson added that five-year fixes are more likely to be a popular choice among landlords, as the stress test used on two-year fixes does not apply to five-year deals.

“This could well be one of the reasons why BTL lenders have focused competition within this market,” she said.

More so, the “price war” at the lowest end of the BTL market showed no sign of abating, said Nelson – as The Mortgage Works cut its five-year fixed rates to below 2% for the first time on record in February.

“Despite all this good news for landlords, the market has significantly changed in two years and borrowers now have to work their way through a maze of extra regulation, as well as stricter lending requirements,” Nelson cautioned.

“Property still remains an attractive option for many, so it is more important than ever for landlords to seek financial advice to ensure they get the best possible option for them,” she added.

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