According to Moneyfacts, the average rate for a two-year fixed buy-to-let product now stands at 3.41 per cent, up 0.51 per cent from December, prior to base rate increases.
Five-year fixes now have an average rate of 3.56 per cent, a rise of 0.38 per cent when compared to December. Yet Moneyfacts said that any landlords refinancing from a five-year fixed would have a cheaper rate today, as the current average is lower than the 3.68 per cent rate in 2017.
In April, the average two-year fixed buy-to-let rate was 3.22 per cent while the average rate for a five-year fix was 3.42 per cent.
As of May, there are 3,374 buy-to-let mortgages available which Moneyfacts said was the highest number of deals recorded since May 2008. The number of available deals has therefore remained reasonably stable, with just 61 fewer products on the market compared to last month.
At higher loan to value (LTV) tiers, above 85 per cent, there are 79 products on the market compared to 80 in April.
Average rates at higher LTVs are also lower than they were in December, with two-year fixes dropping from 5.17 per cent to 4.8 per cent, and five-year fixes falling from 5.22 per cent to 4.93 per cent.
Eleanor Williams, spokesperson at Moneyfacts.co.uk, said: “Product availability in the buy-to-let sector remains strong, which will be positive news for landlords who saw volumes fall significantly during 2020.
“However, there are indications of an ongoing disparity in the limited supply of rental property available and the growing level of demand from tenants, with 93 new applicants registering per branch in March, compared to 78 in February, according the latest Propertymark Private Rented Sector report.”
She added: “Landlords may have a greater choice of products, but the average rates on offer are on the increase.
“Rising interest rates and supply of property are not the only factors that may impact landlords in the months to come, as tax changes and the cost of living crisis may already be pinching the potential profitability of investing in property – although recent information from Hamptons suggested that the first quarter of 2022 was the ‘most active’ for landlords since 2016 when the stamp duty surcharge on the sale of second homes was introduced.”
A ‘hostile environment’
Williams added: “Rental reform featured in the Queen’s Speech, highlighting the current challenges facing consumers. Some landlords could feel that, coupled with other changes such as stamp duty surcharges and tax burdens, this is creating a ‘hostile’ environment, which could see some consider leaving the sector altogether.
“Providers will need to work hard to attract new business in the months to come, so it will be interesting to see how the buy-to-let market adjusts to external factors.”