buy-to-let mortgage

Mortgage options are increasing for first-time buy-to-let landlords

As the number of first-time buy-to-let landlords has risen, mortgage availability is increasing for new landlords. What does this mean for the sector?

Over the past 12 months, the percentage of mortgage deals available for first-time buy-to-let landlords has risen. The number of deals has fallen year-on-year. However, mortgage availability decreased overall throughout the COVID-19 pandemic.

On 1 February 2020, there were 1,635 mortgage deals available for new investors. A year later, this decreased to 1,311, but the percentage of the buy-to-let market available to first-time landlords has risen from 61% to 65%.

Eleanor Williams from Moneyfacts says: “Overall availability contracted sharply last year, which makes it even more positive to note that at 65%, the proportion of the market that is available to first-time landlords has grown by 4% year-on-year, meaning that would-be investors have plenty of choice, and is also an indication that providers are committed to servicing this demographic of borrowers.”

The current state of the mortgage market

At the end of 2020, mortgage approvals hit a 13-year high and has continued at record levels. With the stamp duty holiday extension, the sector will likely remain busy in the coming months. Mortgage availability even recently hit the highest level since the first national lockdown in March 2020. This shows lenders are continuing to gain more confidence.

The government also recently announced the new mortgage guarantee scheme, which will provide greater mortgage availability for homebuyers with 5% deposits. This will especially help first-time buyers find more mortgages with smaller deposits.

A rise in first-time buy-to-let landlords

Over the past year, there has been a rise in small and first-time buy-to-let landlords. The stamp duty holiday and low interest rates have enticed more new landlords to enter the buy-to-let sector. During times of instability and uncertainty, and when savings rates are especially low, property in the UK can be an especially attractive form of investment.

With an increase in new landlords entering the market, lenders have gained more confidence and are becoming more willing to lend to first-time landlords. Throughout the coming months, mortgage availability will likely further increase, providing greater choice and competition.

On 1 February 2021, the average two-year fixed rate for first-time landlords was 3.1%. And the average five-year fixed rate sat at 3.66%. However, there are much more affordable deals than these average rates. The lowest rate currently available is 1.64% for a two-year fixed mortgage.

“Those who are considering whether this is the right time to invest would be wise to secure professional, qualified advice to help support and navigate through their choices,” Eleanor Williams comments.

“There may be benefits to setting up as a limited company, some products may require forethought regarding the number of properties they can have in their portfolio, and of course, whether the timing is appropriate for their own circumstances. Careful planning and ensuring that they protect any investments will be vital in these uncertain times.”

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:

STAY AHEAD OF THE MARKET

Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment

FIRST FOR NEWS AND KNOWLEDGE.

Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:

 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

 

+852 6699 9008

Open from 9am-6pm HKT