3,374 BTL products still on offer to landlords but rates rising

The Latest Moneyfacts market research indicates that although there was a small month-on-month dip in the number of Buy-to-Let (BTL) products available to landlords, reduced by 61 to 3,374, compared to this time last year, there are over 1,000 more BTL products available now.

However, prices are increasing with the average two-year fixed BTL rate at 3.41%, the highest level recorded since September 2015. This is up from 2.9% in December pre any Bank Base Rate rises. The average overall five-year fixed rate has also increased for the third month in a row and sits at 3.56%.

Counter-intuitively, considering the normal perceived increase in risk by lenders, landlords’ choice of 79 85% loan-to-value (LTV) products is only one deal fewer than the 80 recorded last month, which was the highest number recorded since May 2008 (104). Also, the average two and five-year fixed rates at 85% is the only LTV bracket where rates are lower now (4.80% and 4.93%) than they were at the start of December 2021 (5.17% and 5.22%).

Eleanor Williams, Finance Expert at Moneyfacts.co.uk, said:

“Product availability in the buy-to-let sector remains strong, which will be positive news for landlords who saw volumes fall significantly during 2020. There are now 3,374 deals on offer, considerably above the number we recorded in March 2020 (2,897). However, there are indications of an ongoing disparity in the limited supply of rental property available and the growing level of demand from tenants, with 93 new applicants registering per branch in March, compared to 78 in February, according the latest Propertymark Private Rented Sector report.

“Landlords may have a greater choice of products, but the average rates on offer are on the increase. The overall average two-year fixed BTL rate for all loan-to-values (LTVs) jumped up by 0.19% month-on-month to sit at 3.41% – the highest recorded in nearly seven years (September 2015 – 3.41%). However, landlords interested in slightly longer-term fixed rates will find that at 3.56%, the equivalent five-year fixed rate is lower than its equivalent from May 2017 (3.68%), so those with maturing five-year fixed rates may be able to secure a more competitive rate now than they did then.

“Rising interest rates and supply of property are not the only factors that may impact landlords in the months to come, as tax changes and the cost of living crisis may already be pinching the potential profitability of investing in property – although recent information from Hamptons suggested that the first quarter of 2022 was the “most active” for landlords since 2016 when the Stamp Duty surcharge on the sale of second homes was introduced. That said, rental reform featured in the Queen’s Speech, highlighting the current challenges facing consumers. Some landlords could feel that, coupled with other changes such as Stamp Duty surcharges and tax burdens, this is creating a “hostile” environment, which could see some consider leaving the sector altogether.  Providers will need to work hard to attract new business in the months to come, so it will be interesting to see how the buy-to-let market adjusts to external factors.”

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