Boost for investors as mortgage choice improves across Buy To Let

Research from independent financial service market monitor Moneyfacts shows a small but encouraging increase in the number of buy to let mortgages for investors.

Moneyfacts says that after two months of small increases, investors now have the highest number of deals to choose from since March 2020.

Following an overall increase of 158 since December, there are now 1,976 BTL products on offer, with growth being seen across nearly all the Loan To Value tiers. 

The service says this is especially positive for investors with lower deposits as this growth has extended to the higher-risk 80 per cent LTV bracket. 

Here, an increase of 26 deals since December could be an indication that despite the still uncertain economic outlook, BTL mortgage providers are keen to cater to these customers, says Moneyfacts.

In-house finance expert Eleanor Williams says: “A note of caution however, as our data reflects the fact that the market remains volatile since the start of the New Year. Lenders have been adjusting their offerings and consequently availability continues to fluctuate – there are now 27 fewer mortgage products on offer than there were just a couple of weeks ago, and so those considering exploring a new BTL mortgage could do well to secure the knowledge and advice of a qualified adviser, to ensure they keep abreast of any relevant changes.

“Another consideration for those who may imminently wish to secure a new BTL deal is the fact that average rates across the Loan To Value tiers are all currently in excess of their equivalents year-on-year.”

Williams states that both the two and five-year average fixed rates for all LTVs are now 0.10 per cent above their January 2020 equivalents. 

“When looked at as individual tiers, it is surprising to see that the 60 per cent LTV two and five-year average fixed rates (2.55 per cent and 2.84 per cent) have seen some of the largest increases when compared to January 2020” she adds.

“With ongoing economic concern, it may be that lenders have increased their provisions for defaults with rate increases at tiers that previously were more competitive.”

Williams believes that recent research from Hamptons - suggesting prospective tenant numbers in December 2020 outstripped 2019 levels while the number of available rental homes dropped everywhere outside of London - may drive a rise in rental growth that may outstrip house price growth. 

“This seems to confirm that there is cause for optimism and that despite the knocks of recent years the BTL sector has a vital place in our recovery” she concludes.