With the outlook for savers continuing to look grim, many people will undoubtedly continue to consider investing in the buy-to-let sector, despite various anti-landlord measures introduced by the government, partly because mortgage borrowing rates remain historically low.
Many lenders have reduced their buy-to-let mortgage rates recently, amid greater competition in the market.
The latest figures from Moneyfacts reveal that the average two-year fixed buy-to-let rate has fallen by 0.31% in one year, and even though the pace of the decline has slowed in recent months, the market has now recovered from the significant drop in products seen at the start of this year.
The hike in the volume of buy-to-let mortgage products on the market has been bolstered since the dramatic fall that occurred in January, giving landlords looking for a mortgage deal today more choice.
Charlotte Nelson, the finance expert at Moneyfacts, said: “The BTL (buy-to-let) market has seen some turbulent times, with significant tax changes, tougher affordability rules and more changes to come into force in September. It is little wonder many thought the BTL mortgage market might show signs of strain. And yet, rates have continued on a downward path. Since the introduction of new regulation in January, however, the pace of the reductions has slowed considerably.”
Mortgage providers are now starting to gear up for further regulatory changes. From 30 September, lenders will have to apply stricter standards for landlords with four or more properties.
Given that 89% of the mortgage deals on the market today are available for borrowers with four or more properties in their portfolio, these changes will affect a large chunk of the market, according to Nelson.
She added: “Faced with these changes, it is likely that competition among providers may start to ebb initially, with the providers instead focusing on their core range and getting their criteria up to date.
“With the added uncertainty in the economy, landlords looking for a mortgage deal are likely to face a bumpy road for a while. Anyone unsure of their options should seek out independent financial advice.”
Article by Marc da Silva