Fixed interest rates for buy-to-let have fallen to their lowest level since September 2022, according to the latest data from Moneyfacts.
On both two- and five-year fixed rate deals, average interest rates have fallen to more affordable levels after peaking six months ago.
According to Moneyfacts, in August 2023 the average two-year fixed rate for buy-to-let mortgages was 6.88%.
But fast forward to February, and a landlord looking for the same deal is paying an average of 5.49%. This varies depending on the level of borrowing required, with a two-year fix for a landlord with a 20% deposit typically paying 1% more than someone with 40% of their own money to put down.
Whatever your deposit, you will still find that the rates are more attractive than in the summer.
Rachel Springall, financial expert at Moneyfactscompare.co.uk, said: “This is positive news for borrowers who wait patiently for the fixed rates to drop.
“However, it is possible that the fixed rates will increase slightly in the coming weeks volatile swap ratesSo those looking to refinance may want to get a deal quickly to avoid being disappointed.”
One area where this instability is beginning to surface is in product choice. Moneyfacts revealed that the number of buy-to-let deals available (250) was higher than six months ago.
However, it has also fallen in the past month.
Springall said: “The ebb and flow of deals makes it essential for potential borrowers to seek advice to explore the options available.
“Deeper analysis of product selection shows that five-year fixed offers have declined month over month, but two-year fixed offers are resilient. It will be interesting to see how lenders will adjust their ranges in the coming weeks. There are now more mortgages with fixed terms of two and five years than six months ago.”
Today’s figures come just after Hampton released data showing that rental growth for newly let properties in Britain rose by 8.3% year-on-year – although this was the slowest pace in 13 months.
Springall said: “Hamptons indicated that rental growth is expected to exceed inflation for the remainder of 2024.
“Yet existing landlords will be concerned about the continued profitability of a buy-to-let portfolio as their margins have been impacted by a reduction in mortgage interest relief, tax changes for CGT and holiday lets, plus new EPC requirements.”
| Buy-to-let market analysis – Source: MoneyfactsCompare.nl | |||||
| Product numbers | February 22 | February 23 | August 23 | January 24 | February 24 |
| Number of BTL products (fixed and variable) | 3,540 | 2,246 | 2,585 | 3,114 | 2,838 |
| Two-year fixed rate BTL all LTVs | 1,146 | 539 | 676 | 968 | 972 |
| BTL with a two-year fixed rate at a 60% LTV | 111 | 90 | 67 | 72 | 70 |
| Two-year fixed rate BTL at a 75% LTV | 469 | 271 | 328 | 416 | 420 |
| Two-year fixed rate BTL at an 80% LTV | 149 | 63 | 67 | 108 | 120 |
| Five-year fixed rate BTL all LTVs | 1,336 | 865 | 1,107 | 1,324 | 1,215 |
| BTL with a five-year fixed rate and a 60% LTV | 126 | 103 | 79 | 83 | 73 |
| BTL with a five-year fixed rate at a 75% LTV | 578 | 412 | 558 | 639 | 588 |
| BTL with a five-year fixed rate at an LTV of 80% | 176 | 56 | 76 | 102 | 129 |
| Average rates | February 22 | February 23 | August 23 | January 24 | February 24 |
| Two-year fixed rate BTL all LTVs | 2.90% | 5.95% | 6.88% | 5.95% | 5.49% |
| BTL with a two-year fixed rate at a 60% LTV | 2.07% | 5.55% | 6.64% | 5.63% | 5.22% |
| Two-year fixed rate BTL at a 75% LTV | 2.86% | 5.95% | 6.87% | 5.94% | 5.51% |
| Two-year fixed rate BTL at an 80% LTV | 3.82% | 6.89% | 7.54% | 6.65% | 6.30% |
| Five-year fixed rate BTL all LTVs | 3.16% | 5.85% | 6.72% | 5.91% | 5.48% |
| BTL with a five-year fixed rate and a 60% LTV | 2.33% | 5.37% | 6.18% | 5.37% | 4.87% |
| BTL with a five-year fixed rate at a 75% LTV | 3.14% | 5.95% | 6.76% | 5.94% | 5.51% |
| BTL with a five-year fixed rate at an LTV of 80% | 4.03% | 6.86% | 7.29% | 6.65% | 6.20% |
| Data shown is valid as of the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk | |||||