Buy-to-Let Mortgage Rates Drop to Record Lows
By |Published On: 12th April 2016|

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Buy-to-Let Mortgage Rates Drop to Record Lows

By |Published On: 12th April 2016|

This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.

Buy-to-let mortgage rates have dropped to record lows, according to data from comparison website Moneyfacts.

After learning that they will be hit with a reduction in mortgage interest tax relief and higher Stamp Duty, landlords have finally received some good news.

Figures from Moneyfacts show that mortgage lenders are cutting their rates significantly in order to encourage landlords to continue to invest in the buy-to-let sector, despite the changes.

Indeed, buy-to-let mortgage rates have been continuously decreasing over the past five years, with the fixed rate sector experiencing notable reductions. The table below shows the average rate changes across the market:

[table id=5 /]

Charlotte Nelson, a finance expert at Moneyfacts, explains the changes in the sector: “The buy-to-let market has faced intense pressure recently, but despite this, rates have continued to fall across all fixed sectors. For example, the average two-year fixed rate has fallen by 0.71% in just two years, while the average five-year fixed rate has dropped by an equally significant 0.76% over the same period.

Buy-to-Let Mortgage Rates Drop to Record Lows

Buy-to-Let Mortgage Rates Drop to Record Lows

“While the new rules and Stamp Duty changes could potentially take the shine off buy-to-let investment, property is often seen as a safe bet, and with rental properties in demand and rent high, buy-to-let remains an attractive proposition.”

Nelson also suggests that pensioners are boosting the buy-to-let sector, as many take advantage of the new freedom rules introduced in April last year. During the past 12 months, almost £3 billion has been paid out in cash lump sum withdrawals, according to the Association of British Insurers.

Nelson believes it is “highly likely that some of this money has been accessed with buy-to-let in mind.”

She continues: “Savings rates are currently so poor that many are looking elsewhere to fund their retirement, so lenders have tried to capitalise on this new pool of cash by offering some of the best rates the buy-to-let sector has ever seen.

“In addition, providers also cut rates in the run-up to the Stamp Duty changes in order to attract those keen to buy before they were implemented, which has further aided the downward slide in rates. However, while the current pressures on the market are not yet causing rates to rise, borrowers should remember that they will now be facing tighter lending rules, including stricter affordability checks, so it is even more important for potential landlords to seek financial advice to see if buy-to-let really is the right option for them.”1

Despite many changes affecting the buy-to-let sector, including stricter affordability checks as a result of the European Union’s Mortgage Credit Directive, Nova Financial’s Paul Mahoney insists that buy-to-let “is not dead”, and explains how the forthcoming changes will impact your lettings business: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/


About the Author: Em Morley (she/they)

Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources. When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.

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