Landlord buy to let deal choice hits historic peak
The UK's buy to let mortgage market has witnessed a surge in product availability, reaching an all-time high, according to Moneyfactscompare.co.uk.
This expansion coincides with a reduction in average two-year fixed rates over the last six months.
The platform's data reveals that there are 3,560 buy to let mortgage products - both fixed and variable - marking a record high since November 2011.
Monthly analysis identifies increases of 92 five-year fixed deals and 114 two-year fixed deals.
While average fixed rates over both terms experienced a monthly rise, the two-year fixed rate remains lower than the preceding year.
New BTL mortgage deal
Springall, a finance expert at Moneyfactscompare.co.uk, said: " Landlords searching for a new deal will find the choice of buy to let mortgages has hit a record high, which could instil a sense of optimism.
"Views are mixed on how the buy to let market will fare this year, but lenders are clearly working hard to attract new business, such as those launching new deals at higher loan-to-value ratios and even deals created for a limited company."
She added: "Diving into the overall choice of buy to let mortgages shows there are still more deals with a fixed term of five years, versus two years, and both counts are at record highs.
"Five-year fixed buy to let mortgages have been in more abundance than their two-year counterparts since June 2020."
Loan-to-value options
For landlords with limited deposits or equity, 80% loan-to-value options have also achieved a record high, with 417 choices available, more than double the volume from 2023.
Ms Springall says this is 'good news for those coming off a two-year fixed deal this year'.
She adds: "However, the downside of the past few years has been volatile interest rates; thankfully, compared to 2023, buy to let mortgage rates are lower, across two- and five-year fixed terms.
"However, if someone locked into a cheap deal back in 2020, they will be in for a shock this year when they come to refinance.
"Landlords will hope rates come down this year, but sticky inflation can delay further base rate cuts, and the swap rate market remains unpredictable."
Impacting landlord profitability
Despite strong tenant demand, factors like reduced tax relief and Energy Performance Certificate (EPC) upgrading costs are impacting landlord profitability.
Ms Springall said: "Affordable housing remains in short supply, so demand for rental properties continues.
"However, rising costs are taking their toll on prospective landlords."
She points to a recent study from Hamptons which revealed that landlords making home purchases fell below double digits to 9.6% of house sales in January - a record low since records began in 2009.
Ms Springall continued: "The margin of profit from rental income may well be tighter than in previous years, due to several factors, including the cull of mortgage tax relief and the expense to cover EPC requirements.
"Property is still regarded as a safe long-term investment, but both new and existing landlords would be wise to seek advice to assess the latest deals available to them and if it’s still viable to retain their portfolio."
'Golden opportunity for student landlords'
The managing director of Accommodation for Students, Simon Thompson, said: "It looks like the UK's BTL mortgage market is booming with a record number of deals available.
"With so many buy to let deals, this could be a golden opportunity for student landlords to secure financing that suits their needs, whether they're expanding their portfolios or refinancing existing properties."
He added: "However, student landlords need to be aware of rising costs and tighter margins which means careful planning is key.
"Profitability hinges on picking the right mortgage and managing expenses like EPC upgrades so expert BTL mortgage advice will be crucial to navigate this record-high market."
