buy-to-let mortgage rates mortgages

Several lenders have reduced buy-to-let rates as competition grows

Although borrowing remains considerably more expensive than it was a year ago, buy-to-let rates have begun to show signs of easing. 

Since the most recent Bank of England base rate rise, after an initial spike in rates as well as a drop in product numbers, it seems some stability is beginning to return to the market. Whether interest rates will rise again next month remains to be seen, though, and the market remains tough for many borrowers.

Buy-to-let rates, like mainstream residential, have increased considerably from the lows prior to 2022, and those who fixed onto long-term deals around that time are likely to benefit greatly now until the time comes to remortgage.

The average buy-to-let mortgage rate increased to around 7% this month for a two-year fixed product, while five-year buy-to-let rates are slightly lower now. Across the board, mortgage rates have risen steeply since May, due to disappointing inflation figures.

With around 60% of all landlords in England holding a buy-to-let mortgage, according to the English Private Landlords survey (or around two million mortgages, according to UK Finance), the rate rises are certain to have an impact on a large proportion of landlords.

Which buy-to-let rates are falling?

Foundation Home Loans is one of the latest mortgage providers to announce cuts to its buy-to-let rates, reducing them by 0.60% on its core range. Its fixed rates now start from 6.84%, with a loan to value (LTV) of up to 65%. It also has discounted rates from 7.09% on an LTV up to 75%.

The lender has also broadened its offering by reintroducing two-year fixed rate products for large HMOs and short-term lets, both of which come with a 1% fee. For an large HMO, the two-year rate is now 7.84%, while for short-term lets it offers 7.94%, both with an LTV of up to 75%.

Tom Jacob, director of product and marketing at Foundation Home Loans, said: “As a lender, we’re always looking to be on the front foot when it comes to supporting borrowers and our intermediary partners, and this repricing across our core owner-occupier and buy-to-let product ranges represents a highly positive move in what has been a testing time for a variety of borrowers.”

Next, specialist lender Keystone Property Finance has also dropped its buy-to-let rates by up 65 basis points across its range, with the largest reductions being seen on its expat and holiday let products.

It has also cut its rates for existing borrowers on its variable rates to switch to a fixed rate with minimal fees and a 55bps reduction. The lender has reduced product transfer deals by 50bps, and cut its classic range by up to 40bps.

David Whittaker, CEO at Keystone Property Finance, said: “As we know, swap rates do go up and down, but we will always endeavour to swiftly pass on cheaper borrowing costs to our brokers and their clients. This is a core principle of our business and one that we will always endeavour to uphold.”

Landbay also announced reductions across its buy-to-let rates of up to 0.70%, with the standard two-year fixed product now starting at 5.49% for 75% LTV. Its ‘like-for-like’ remortgage product is now available at 4.39% for 75% LTV, after a cut off 40bps.

First-time landlords, trading companies and HMO owners can also benefit from the lender’s new buy-to-let rates, with Rob Stanton, business development director, pointing out that the company is glad to be able to pass on reductions to swap rates “as quickly as possible”.

Boosting choice in the market

Furness Building Society is another lender that has added a new range of products catering to both the residential and buy-to-let market, as well as short-term and holiday lets. It offers regulated, unregulated and consumer buy-to-let deals for up to 80% LTV, with up to 75% LTV for holiday lets.

At present, buy-to-let rates start from 6.14% for up to 75% LTV for a two-year fixed rate discount product. It states that applicants will generally be required to achieve gross rents that are at least 125% of the interest charges at the initial pay rate, but all cases will be reviewed based on the customer’s circumstances.

Alasdair McDonald, head of intermediaries at Furness, said: “We’re thrilled to be back in the market with this new range of products available across England, Scotland and Wales.

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