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Buy-to-let landlords urged to expand portfolios or remortgage now

The outlook for buy-to-let landlords seeking mortgages has vastly improved over the past few weeks. Investors are now being encouraged to reassess their portfolios sooner rather than later.

The UK buy-to-let market is showing further signs of recovery as new data reveals positive growth in the mortgage sector. The amount of choice available to buy-to-let landlords looking to borrow to invest is now almost back to pre-coronavirus levels.

Interest rates on a selection of higher loan-to-value (LTV) products have also gone down. This follows many lenders restricting their higher LTV products for a number of weeks at the start of the outbreak. Now, new data published by Moneyfacts shows a more risk-tolerant view emerging from the mortgage market.

As a result, landlords are being urged to take advantage of the expanded market. Whether that involves recalculating your portfolio financing, or investing in new property, the current lending environment is positive for most investors right now.

Lenders opening up hundreds more options

Between May 2020 and June 2020, buy-to-let product numbers have surged by 280. This brings the total number of mortgage options available to landlords up to 1,735 from 1,455. The rise is likely to be a result of mortgage lenders reshifting their focus to encompass new borrowers as well as existing ones. Since the government also released new advice on physical valuations, this has also meant lenders can reintroduce a huge number of products that were shelved.

Buy-to-let landlords with a view to the long-term could benefit from the biggest variety in mortgage options. Five-year fixed-rate buy-to-let mortgages have seen product numbers rise the most, from 480 to 607 over the past month.

In terms of rates, borrowers wanting to fix for five years with 80% LTV will see the biggest rate reduction. The average has reduced by -0.67% between May and June, from 4.32% to 3.65%.

Eleanor Williams, finance expert at Moneyfacts, said: “The Bank of England base rate currently remains at its lowest ever level of 0.10%, resulting in further despair for savers.

“However, those looking to invest their money in property now that the mortgage market has reopened may feel now is a good time to explore their options, particularly with rates becoming more competitive and product choice beginning to return this month.”

Positive growth: good news for landlords

According to Moneyfacts, Rightmove’s survey looking at the UK rental market provided a further boost for the sector. It showed that tenant demand for rental properties had grown by 33% in May 2020 compared to 2019. The recent rise in buy-to-let product choice will be welcome to landlords looking to meet this demand.

In terms of planning for the future, Eleanor Williams adds: “As we begin to see indications that the buy-to-let market may be starting to recover, the full economic impact of the current crisis is still not yet clear for tenants and landlords alike.

“However, those who are in a position to consider capitalising on possible falls in house prices to expand their property portfolios or indeed those looking to switch their current deal, may wish to move quickly.”

Investors who choose to remortgage or make further investments should seek independent advice, she adds. A financial adviser should be able to advise on options relating to individual criteria and needs.

BuyAssociation has a range of investment opportunities for both buy-to-let landlords and owner-occupiers. We can also put you in touch with one of our independent mortgage partners. Get in touch for further details, or sign up for free to view more of our investment options.

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