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Buy-to-let product choice reaches post-2007 high as rates rise

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  • 25/02/2019
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Buy-to-let product choice reaches post-2007 high as rates rise
Almost 400 buy-to-let (BTL) products have been added to the market in the last year, taking the total to more than 2,000 and the highest number since October 2007, when 3,305 deals were available.

 

According to Moneyfacts there are 2,162 BTL deals available today – up from 1,765 last March and 1,982 in September, including 467 for limited company landlords not using special purpose vehicles.

However, in contrast to the residential mortgage market, where intense competition is driving interest rates down, BTL lenders have pushed rates up over the last five months.

Between March 2017 and September 2018 the average two-year fixed rate buy-to-let mortgage was around 2.86% to 2.96%. However, it is now at 3.12%.

The average five-year fixed rate deal has also increased since September 2018, rising from 3.46% to 3.61% – although this is not quite as high as the 3.77% in March 2017.

For limited company products not involving special purpose vehicles, the average two-year fixed rate is at 4.08% and the average five-year fix is at 4.53%.

 

No swap rate increase

Moneyfacts spokesman Darren Cook noted that despite ongoing uncertainty in the property market, providers were not shying away from offering landlords a greater choice of products.

“Although it is also evident from our research that heightened competition to try and attract BTL business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector,” he said.

“As there appears to have been no sustained increases in interest swap rates since September 2018, a strong argument can be made that the recent increases to BTL mortgages interest rates have been a result of BTL mortgage providers attributing a little more to risk into their product rates due to uncertainty over future economic conditions.”

He added: “The disparity in the direction of movement between BTL and residential interest rates may be due to the way these two types of lending are primarily assessed.

“BTL mortgage providers generally consider the potential rental income and affordability during assessment, whereas residential mortgage providers typically look back at income earned by the borrower and affordability.”

 

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