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Buy-to-let mortgage options rise as rates remain steep

Even though fixed rates dropped slightly last month, they are still significantly higher than the same time period in the previous year.

2 min read

Moneyfacts reported that the buy-to-let sector is experiencing a surge of product choice, reaching heights not seen since August 2022.

The financial information provider discovered that the number of buy-to-let products has reached its peak since July 2022, with a total of 2,400 at present. This is significantly higher than in 2022 when there were 2,746 such offerings available.

The number of buy-to-let mortgages plummeted following the disastrous mini-Budget, when lenders pulled their deals from the shelves. But they quickly bounced back by the end of November and have been rising since. finance expert Rachel Springall quoted: “It is encouraging to see buy-to-let product choice gradually recover from the shock surrounding the fiscal announcement. The choice of deals to landlords plummeted and both the average two and five-year fixed rates rose to 6% towards the tail end of 2022, but thankfully, both rates have slowly dipped below this level.

“There are now 2,400 deals for landlords to choose from, up from just 988 in October 2022, thanks to consecutive months of growth.”

What does the future hold for rates in 2023?

In the past two years and five-year fixed term, average fixed rates have slightly declined from month to month.

Two-year fixed rates have recently dropped to an all-time low of 5.81%, a reduction from the previous February's rate of 5.95%.

Despite this, interest rates remain significantly higher than they were two years ago at 3.05%, and five years ago at a mere 2.96%.

Consequently, landlords who are transitioning off of a five-year or two-year fixed rate will discover that the current rates have risen more than two percentage points higher than they had previously been accustomed to paying.

Springall added: “Landlords may be waiting for fixed mortgage rates to come down further or indeed opt for a tracker mortgage to give them more flexibility to eventually switch their deal. However, interest rates are only part of the decision-making process when entering a buy-to-let investment.

“Whether that be for new or existing landlords, it is always wise to seek advice to ensure it is the right time to commit to a deal.”

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