Interest rates on buy-to-let mortgages have risen slightly, but the choice of deals has improved over the past month, new data from Moneyfacts.co.uk shows.
The number of mortgages for landlords has increased marginally by 39 deals, but comes after a huge monthly drop in product choice in early February. Moneyfacts said this showed signs of stability for buy-to-let mortgages.
When it comes to prices, Moneyfacts said the average two- or five-year fixed rate rose a modest 0.01% month-on-month for both. However, since the beginning of 2024, they have remained below 6%.
Rachel Springall, financial expert at Moneyfactscompare.co.uk, said this stabilization in the availability of buy-to-let products was a positive turn for landlords after the last few months of contract selection.
“Lenders will undoubtedly need to remain flexible with their product range and ensure they can respond quickly to market uncertainty, such as the volatility around swap rates,” she said.
“Deeper analysis of product choice shows that lenders are now offering more two- and five-year fixed deals year-on-year, but month-on-month the choice of two-year fixed deals is down slightly, but five-year options are up.”
Advice to landlords looking for a buy-to-let mortgage in April 2024
For anyone looking to invest in a property that can be rented out in 2024, Moneyfacts says there are certainly opportunities, but so-called landlords must take into account additional costs and taxes.
Moneyfacts released figures from the Office for National Statistics (ONS), which showed that the average private rent in the UK increased by 9.2% in the 12 months to March 2024, compared to 9.0% in the 12 months until February 2024. This was the highest annual percentage. change since the start of the UK data series in January 2015.
Springall said: “The potential returns from investing in buy-to-let may inspire borrowers to take the plunge, but it is crucial that they seek advice to ensure it is the right choice for them. The profit margin from rental income could indeed be smaller than in previous years, due to several factors, including the abolition of mortgage tax relief and the costs of covering EPC requirements.”
She added: “Rental costs have risen at a time when affordable housing is scarce. However, those looking to sell this year may want to take note house prices have fallenIn addition, landlords who sell will see higher capital gains tax (CGT) than in previous tax years, which could dampen the overall return on their original investment.”