The latest data from Moneyfactscompare.co.uk reveals a dip in fixed rates for both two-year and five-year BTL mortgage terms. For the first time in over a year, landlords are witnessing a significant drop in the rates for fixed buy-to-let mortgages. If we’re talking numbers, the average fixed rates across both two-year and five-year terms are now at their lowest since the autumn of 2022. To put this into perspective, just six months back, these rates were at an all-time high since records began in November 2011. It’s a breath of fresh air for landlords who’ve been hit hard by soaring rates.
The Bigger Picture
While the rates are taking a dive, the overall availability of buy-to-let products, including both fixed and variable options, has seen a bit of a shuffle. There’s been a slight drop in the number of products available month-on-month. However, when you compare the figures to six months ago, there’s an uptick with around 250 more deals on the table. This fluctuation in product numbers is a clear sign of the market’s dynamic nature, responding to various economic pressures and opportunities.
A closer look at the numbers reveals some interesting trends in the availability of different mortgage products:
- Fixed Rate Mortgages: Both two-year and five-year fixed rate options have seen variations in availability and rates. Interestingly, while the overall product count for buy-to-let mortgages has decreased slightly from January to February 2024, the number of two-year fixed rate deals has remained relatively stable, and there’s a slight decrease in five-year fixed rate options.
- Average Rates: Across the board, average rates for two-year fixed rate mortgages have dropped from 5.95% in January 2024 to 5.49% in February 2024. Similarly, five-year fixed rates have also seen a decrease, going from 5.91% to 5.48% in the same period.
Expert Insight
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, sheds light on the situation, “Landlords concerned about interest rates may be pleased to find that both the average two- and five-year fixed buy-to-let rates have dropped to their lowest points since September 2022. These rates sat at a record-high just six months ago, so this is positive news for borrowers who have been patiently waiting for fixed rates to come down. However, it is possible fixed rates will edge up slightly in the coming weeks due to volatile swap rates, so those looking to refinance may wish to secure a deal quickly to not be left disappointed.”
The fluctuating number of products available underscores the importance of seeking professional advice to navigate the ever-changing landscape. With the resilience shown by two-year fixed offers and the slight dip in five-year options, it’s a mixed bag that requires a strategic approach.
The Rental Market
Amidst these mortgage rate changes, the rental market itself is undergoing its own shifts. A study by Hamptons highlights that rental growth on newly let properties has increased by 8.3% year-on-year across Great Britain, although this is the slowest growth in over a year. Despite this, expectations are that rental growth will continue to outpace inflation through the remainder of 2024.
A Word of Caution for Prospective Landlords
It’s not all smooth sailing, though. Current landlords and those considering entering the market face several challenges, including changes in mortgage rate tax relief, capital gains tax alterations, and new energy performance certificate (EPC) requirements. These factors are squeezing profit margins and making it crucial for potential investors to seek comprehensive advice before diving in.