Many landlords have come under increasing pressure in recent years as a result of tax changes and tighter regulations imposed on the buy to let sector, but new research has found that they have more options when it comes to selecting a mortgage.
Indeed, the research from Moneyfacts.co.uk shows that property owners currently have 2,163 mortgages to choose from – the highest since before the financial crisis began to hit in October 2007.
That said, since March 2017, average rates have increased by 0.16% to their current level of 3.12% following the Bank of England rate rise last year, but the average five year fixed rate has fallen slightly over the same period, from 3.77% to its current rate of 3.61%.
‘It is encouraging that buy to let landlords have more mortgage choice than they have had at any time in almost 12 years. Total product numbers have increased by 397 over the past year and by 706 over the past two years,’ said Darren Cook, finance expert at Moneyfacts.co.uk.
‘Despite ongoing uncertainty in the property market, providers are not shying away from offering landlords a greater choice of products, although it is also evident from our research that heightened competition to try and attract buy to let business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector,’ he explained.
‘Indeed, the average two year fixed buy to let mortgage rate has increased by 0.20% to 3.12% since September 2018 and the average five year fixed rate has increased by 0.15% over the same period,’ he added.
He pointed out that as there appears to have been no sustained increases in interest SWAP rates since September 2018, and a strong argument can be made that the buy to let mortgages interest rate increases which have been seen of late are a result of mortgage providers erring on the side of caution due to uncertainty over future economic conditions.
‘The disparity in the direction of movement between buy to let and residential interest rates may be due to the way these two types of lending are primarily assessed. Buy to let mortgage providers generally consider the potential rental income and affordability during assessment, whereas residential mortgage providers typically look back at income earned by the borrower and affordability,’ he concluded.