Jonathan Fowler of Fowler Smith Mortgages & Protection examines the ways that lenders are spurring on the UK housing market.
News outlets might be presenting an overview of doom and gloom, but in the mortgage market there are plenty of positives to see. This comes after seeing 5 year SONIA swap rates reduce to 3.678% as of 4th April 2025 – compared to 3.937% just a month prior.
Many lenders are reacting fairly swiftly to this, with some reducing their fixed rate offering across the board. For property investors, this is a welcome sight. Lower fixed rates could increase the overall net yield of the investment they’re buying, and allow capital to build up faster to go towards further investments.
This will also likely spur on the investor side of the housing market, especially after recent stamp duty changes.
Investors aim for income, capital growth or both from their investments – and a reduction in the monthly outgoings will offer a positive outcome all round. Naturally, cheaper borrowing would usually spur on the housing market as a whole and increase activity. This would be welcomed all round, and more activity not only boosts investor confidence, but also developers looking to acquire land and build will feel more confident, too.
Specialist lenders active in UK housing market
It usually takes a while for rate reductions to feed through to the more specialist lending market, but we’re hearing how some lenders who cater for expats, foreign nationals or focus on the more complex of property types, are also revealing their appetite to lend at present. Some lenders are even promoting their ability to lend in the tens of millions, in order to prompt large portfolio landlords to move their lending over, or acquire new purchases.
Lenders are also doing their part to help future-proof for landlords, with some offering specific schemes, such as the ‘Green Further Advance’ by The Mortgage Works – which allows existing borrowers borrow up to a further £15,000 to go towards improving the energy efficiency of their buy-to-let property – up to a maximum of 75% loan to value total (subject to eligibility, as ever).
It’s quite clear to see that lenders want to continue to push longevity of investment properties by adopting such schemes.
Investor interest in new-builds
With energy performance ratings in mind, we’re seeing many more investors purchasing new-build properties, with ‘green’ rated energy performance certificates (usually categorised by lenders as having an EPC rating of A-C). Some lenders even reward investors for purchasing such properties, with either a lower interest rate, lesser arrangement fees or even offering an element of cashback upon completion.
With a deadline at present set for 2030 for energy ratings to meet a minimum of a ‘C’ for let properties, buying a modern, energy efficient home as an investment seems to be one of choice for those investing. Not only that, but tenants themselves can benefit from cheaper energy bills, which is a great help.
I’m hopeful to see more lenders reduce rates going forwards. It’s still predicted that we’ll see some further base rate cuts by The Bank of England throughout the year – which will no doubt help the housing market. Lower rates increase activity, which is needed post-stamp duty changes! Investors seem keen to find good deals, and recent activity should hopefully provide some needed resurgence.
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