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BTL rates keep rising as high LTV availability tightens

  • 01/12/2020
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BTL rates keep rising as high LTV availability tightens
Buy-to-let (BTL) mortgage rates have continued to rise since the summer while product availability has failed to recover to its pre-pandemic levels.


According to data from Moneyfacts, interest rates across all loan to value (LTV) tiers have risen since July with the biggest increases at 80 per cent LTV.

At this LTV level, interest rates have increased almost a full percentage point from 3.18 per cent in July to 4.16 per cent on average for a two-year fix.

A slightly less severe but still notable 52 basis point (bps) increase has been seen in the average five-year fix market at 80 per cent LTV, and this is after a 21bps fall in November.

For 75 per cent LTV deals the average two-year and five-year fixes have increased by 26bps and 24bps respectively to 2.98 per cent and 3.38 per cent.

And at 60 per cent LTV rates have typically risen by 28bps and 21bps to 2.56 and 2.86 respectively.

Perhaps surprisingly however, when considering rate changes compared to a year ago, the 75 per cent LTV tier is largely at the same level, while the lower 60 per cent LTV sector has seen notable rises of 60bps on two-year fixes and 49bps on five-year deals.


Product plateau

Product numbers have also failed to see any real recovery in that time as well, although there has at least been some stabilisation.

Moneyfacts reports a total of 1,792 BTL mortgage products at the end of November – up a little from the 1,738 in July, but down from the 1,825 in October.

These figures are all still far below the 2,897 which were available just before the pandemic hit in March.

The overall total hides movements within the LTV bands.

The growth in product numbers in October was almost solely down to the 80 per cent LTV tier which rose from 128 to 77 products in July – however that as subsequently fallen away to just 74 at the end of November.

For context, in March there were almost 300 more deals available at this level.

The 75 per cent LTV range saw numbers fall after July but has since recovered to the same number of 618, although this remains far below the peak of 1,080 products in March.

Meanwhile, the 60 per cent LTV sector has been far less affected – from 373 products in March it rose to 414 in July but has now fallen back by 100 at the end of November.


Six months of rate increases

Moneyfacts spokeswoman Eleanor Williams said after dropping to 1,455 products available in May, the earlier resilience and increase in product choice seems to have taken a small hit recently.

“We have however seen an increase of 20 products come to market since the start of November, but current totals still represent a 38 per cent contraction in the market when compared to March,” she said.

“According to our data, 80 per cent is currently the highest LTV available to landlords since the handful of 85 per cent LTV deals that had come back to market were withdrawn in mid-October.

“It may therefore be disappointing to see that the choice of products in the 80 per cent LTV tier has shrunk by 25 deals since the start of November, with 74 now on offer and resulting in less choice for those landlords with lower levels of equity or deposit.”

And Williams noted the overall average two-year fixed BTL rate at all LTVs has increased for six consecutive months.

“Landlords who are considering investing or refinancing their BTL properties may wish to explore their options soon – both in order to capitalise on the possible savings available via the stamp duty holiday before this expires at the end of March 2021, but also before rates potentially increase even further.”

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