September research from Moneyfacts.co.uk showed the month started with 2,968 products on offer in the BTL sector, the highest number since October 2007 at 3,305. This is 71 products more than there were on offer pre-pandemic in March 2020.
This month, the average two- and five-year fixed BTL rates have reduced this month by 0.03 per cent and 0.04 per cent respectively. At 2.94 per cent the two-year fixed average is the lowest it has been since January at 2.89 per cent, and at 3.25 per cent the five-year fixed equivalent is the lowest since December 2020.
Eleanor Williams (pictured) finance expert at Moneyfacts.co.uk, said: “As we pass the 25th anniversary of the first BTL mortgages, our data shows the number of products for landlords to choose from has risen by 153 this month, and at 2,968 is 1,162 higher than this time last year.
“Compared to a year ago, borrowers will notice average rates are higher today. However, the rates a year ago were driven by the impact of the pandemic and product availability was low. Compared to a pre-pandemic September 2019, both the average two- and five-year fixed BTL rates are lower by 0.03 per cent and 0.19 per cent respectively, indicating rate pricing competition for those looking for new finance.”
Green Mortgages still hard to find
Jeni Browne, director of BTL specialist broker Mortgage for Businesses added: “Despite the BTL choice right now, green mortgages are still hard to come by. While 62 per cent of landlords tell us they are interested in mortgages that reward borrowers with discounted rates for making their properties more energy-efficient and shrinking their carbon footprint – after 25 years of lending, the number of products are still very limited.
She said the UK’s largest lenders have launched a number of so-called green mortgages over the last 18 months, but added: “But these products only offer borrowers preferential rates when they purchase an energy efficient property – one with an EPC rating of A to C, for instance. They don’t reward landlords who actually improve the ecological footprint of the UK’s housing stock.”
“A green mortgage should mean that, once a landlord can confirm they have a revised energy rating for their property, their lender will recalculate their mortgage rate at a discount. “That is important because much of the UK’s housing stock is very energy inefficient, making our homes a major source of greenhouse gas emissions.”
At the top end of the BTL loan-to-value sector (LTV) there is a slightly different story for landlords with smaller deposits or amounts of equity. At 85 per cent LTV, availability remained unchanged at just 19 products this month, 13 less than were available in September 2019. The average two- and five-year fixed rates in this bracket of 5.61 per cent and 5.83 per cent are 0.88 per cent and 0.44 per cent higher than what was on offer two years ago.