buy-to-let mortgage

Better deals on buy-to-let mortgages for landlords in June

The average rate on buy-to-let mortgages dipped slightly in June, improving the outlook for landlords who are set to remortgage or take out new loans.

While buy-to-let mortgages remain more expensive than they were in the aftermath of the government’s mini-Budget in autumn 2022, rates have recently fallen to almost their lowest level since they first began to climb.

The average rate now, as of 1st June, is 5.55%, which is slightly down on May’s 5.60% and reflects the growth in competition in the market among lenders. A number of lenders have announced new product ranges and incentivised offers in their buy-to-let mortgages over the past week, which is good news for landlords.

At their peak, average rates for buy-to-let mortgages hit 6.79% in August 2023, and the subsequent fall in rates has been consistent despite the fact that the Bank of England base rate has been held at 5.25% since the same month. This coincides with improving swap rates, and a strengthening economic outlook due to falling inflation and GDP growth.

The hope and expectation now is that the base rate will come down in the coming months, which will spur lenders on to offer even more competitive products and cheaper buy-to-let mortgages. In turn, this is expected to boost interest and appetite in the buy-to-let space among mortgaged buyers.

More buy-to-let mortgages on the market

There has been a healthy level of growth in the quantity of landlord mortgage deals on the shelves, as both high street lenders and specialist lenders have boosted their offering. However, landlords should consider more than just the rates, as some products come with other incentives that can benefit, such as free legal fees.

It is also important to look at what fees are being charged on each product, as these can sometimes outweigh the savings of lower overall rates. However, for some landlords, the certainty of a lower monthly payment may be appealing enough to merit the higher fee.

Of course, the current uncertainty within the political landscape may have a knock-on effect on the markets, meaning many do not expect any drastic changes in the lending space for the next couple of months. But the fact that the UK is within touching distance of its 2% inflation target is likely to be boosting market confidence overall.

High demand from tenants

One specialist lender that has recently launched a new offer for landlords seeking buy-to-let mortgages is Buy to Let by Foundation.

They have launched a new limited edition, five-year fixed-rate product within the F1 tier, which caters for landlord clients with an almost clean credit history. The new deal is available up to 75% loan to value (LTV) on a rate of 5.74%, with a 1.75% fee.It’s available to individual, portfolio and first-time landlords, for both purchase and remortgage activity. The product comes with a rental cover ratio of 125% at pay rate for limited company and basic-rate taxpayers, and 145% at pay rate for higher-rate taxpayers.

Tom Jacob, Foundation Home Loans’ director of product and marketing, said: “Our intermediary partners continue to seek a wide array of options across all different types of landlord clients, whether they are experienced portfolio players or indeed first-time investors making their first forays into property investment.”He added that demand in the private rented sector continues to exceed supply “by some distance”, and offering competitive mortgage finance to landlords enables them to offer quality properties to this “growing pool of tenants” – while also allowing them to secure better yields and profits.

“At Foundation we’ll continue to explore a wide range of product options for landlords, whether for those who are close to the mainstream, those looking for more specialist finance, or those seeking to purchase or refinance more specialist property types.”

Whether you’re a first-time investor or an experienced landlord, BuyAssociation can help you secure your next UK property investment, while also offering you the expert advice of our independent partners. Get in touch for more information.

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