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Landlords seeking buy-to-let mortgages see more competition

Buy-to-let mortgages have followed the same trends as standard residential lending, but the market remains competitive with new products and options available for landlords.

Just as many homeowners have seen their mortgage rates go up over the last couple of years as their existing rates came to an end, property investors have been navigating a trickier borrowing climate. The good news is that rates have fallen since the start of the year, while product numbers have been on the rise.

This is important as it gives landlords using buy-to-let mortgages a greater range of choice, whether you’re looking for a fee-free product, the lowest possible rate, or other incentives such as zero valuation fee. The best choice will depend on your circumstances, and many investors will use a specialist broker to navigate the market.

In April, average fixed-rate buy-to-let mortgages were offering an interest rate of 5.55%. This is a slight rise on February and March (where averages were 5.50% and 5.53% respectively), but still down on the 5.95% average in January – and well below the peak of 6.79% in August 2023.

However, looking at rates alone does not present a full picture of the market, as more lenders have been offering a variety of incentives and range of options to entice landlords seeking to remortgage or take out new buy-to-let mortgages.

New options from Fleet

The latest specialist lender to renew its offering of buy-to-let mortgages is Fleet Mortgages, which announced new products and lower pricing across its range for landlords this week.

Its two new fixed rates – only available up to 65% loan to value – are available at a rate of 5.64% with a £1,999 product fee (for loans up to £300,000 aimed at the lower end of the market), or a rate of 5.84% with zero product fee (on loans of up to £2m for higher end purchases).

At the same time, despite an uplift in swap rates, which is what many lenders respond to when setting their rates, five-year buy-to-let mortgages are now up to 15bps cheaper on 75% LTV products. Again, landlords can choose between a fee and a lower rate, or a slightly higher rate fee-free, depending on their circumstances.

The lender is also offering free valuations on properties up to £500,000, and these sorts of incentives are becoming increasingly popular as lenders strive to entice borrowers despite rates being higher than they had been prior to the Bank of England lifting its base rate.

Buy-to-let mortgages with more options

Commenting on Fleet’s new range, Steve Cox, Chief Commercial Officer at Fleet Mortgages, said: “We’ve seen over the last 12-18 months that landlords want options; for some that is in order to meet affordability criteria in a higher rate environment, while for others it is about not adding fees to the loan.

“These new standard rate products, and the price cuts at 75% LTV, provide those options and should hopefully give advisers further product choice to present to those eligible landlord borrower clients, for both remortgage and purchase business.”

Renegotiating mortgage finance is one of the top ways that landlords and property investors have been looking to save money, to mitigate any rising costs they may have experienced over the last 18 months, according to a survey from Foundation Home Loans carried out by Pegasus Insight.

Almost a third (30%) of respondents said they had renegotiated their buy-to-let mortgages with their existing lender, showing that this can be an effective way of reducing costs. Standard variable rates remain significantly more expensive than fixed rates, so advisers are urging borrowers to ensure they shop around for the best fixed rate.

In the survey, a further 22% of landlords had remortgaged to another lender in order to secure the best deal. If you are considering this course of action, it is worth noting that there can be other costs involved when transferring to a new lender.

This may include an administration fee or set-up cost from the new lender, and you may have to pay for the new lender to revaluate your property to ensure it meets the requirements for the mortgage. There may also be additional conveyancing costs to factor in. A broker can help you to work out what the best option might be.

If you’re a buy-to-let landlord looking at your borrowing options, BuyAssociation can put you in touch with our independent broker partner. Read more UK property news here

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