sold sign buy-to-let mortgage

First sub-5% buy-to-let mortgage since 2022 has been released

Landlords can now fix onto a buy-to-let mortgage rate of less than 5% for the first time in many months, as lenders compete for customers and broaden their product ranges. 

Rates across the residential and buy-to-let mortgage market have been slowly coming down for several weeks now, with many commentators saying that the peak of mortgage rate inflation is now behind us.

The Mortgage Works is the first lender to now have a sub-5% rate on its shelves, and it is on one of its buy-to-let mortgage products. It has reduced its five-year fixed rate on purchase and remortgage loans by 15bps to 4.99%, with a 3% fee, which is available for landlords on up to 55% loan to value (LTV).

This comes after many months of rate fluctuations and rises since the end of 2022. The last time average fixed buy-to-let mortgage rates were below 5% was in September last year, when the average was 4.67%. After this, rates shot up to 5.96% in October and 6.76% in November.

Although the average fixed rate buy-to-let mortgage across the board remains well above 5%, it seems lenders big and small are now reassessing their product ranges and lowering their rates for landlords, while also offering new products to try and entice more borrowers.

Boosting borrower confidence

The latest rate cuts by lenders are expected to boost borrower confidence, and those who are due to remortgage in the coming months may now be able to switch onto more favourable rates than they had been expecting.

The Mortgage Works is a specialist lender of Nationwide Building Society, and Nationwide itself has also made a series of rate cuts in recent days. This has been mirrored by other major lenders, such as Halifax and Santander, as well as some other specialist buy-to-let mortgage lenders.

Daniel Clinton, head of specialist lending at The Mortgage Works, said: “We are pleased to announce further rate reductions following a sustained period of stability in the swap rate environment. These reductions will be well received by buy to let investors and provide welcome relief over their repayments.”

Also commenting on the latest rate cuts, Diarmuid Phoenix, an adviser at Mint Mortgages & Protection, pointed out that falling swap rates are behind the latest moves by lenders, and said this should “give a boost of confidence to borrowers who have been living in fear of the end of their current fixed-rate deals.”

It may also push those prospective buyers – whether first-time homebuyers or investors deciding on whether to take out more borrowing on a new purchase – towards taking action if they had been sitting on the fence, waiting for rates to drop.

Buy-to-let mortgage product boost

Recent data from Moneyfacts revealed that the number of products available to borrowers has now reached levels not seen since February 2022.

As of the start of September, there were 5,338 UK mortgage products available, according to Moneyfacts, which is more than double the number seen in October last year. What’s more, deals in the 85% loan to value (LTV) bracket are now “at their highest levels on Moneyfacts’ records”.

The length of time that lenders are offering products has also increased, with most UK mortgage deals now on offer for 15 days before being withdrawn or changed. This is up from 12 in July 2023.

This is another factor that should serve to add more confidence back into the buy-to-let space as we enter into the final part of the year, after what has been an uncertain few months for many borrowers.

Amit Patel, an adviser at the broker Trinity Finance, commented: “After a summer of doom and gloom, it feels that as we head into the autumn months, we may have turned the corner.”

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