Average buy-to-let rates are more than 30 basis points higher than a year ago, but landlords are benefitting from a much wider choice of products, figures from Moneyfacts have shown.
There were 2,709 buy-to-let products on offer at the start of July, which is 971 more than a year ago and the highest since March 2020 when there were 2,897.
The average overall two and five-year fixed rates have fallen when compared to July 2019, which is good news for landlords coming off previous fixed rates and looking to remortgage.
However, compared to last year, two- and five-year fixed rates for all LTVs are up by 37 basis points to 2.98% and by 31 bps to 3.28% respectively.
Moneyfacts finance expert Eleanor Williams says: “Landlords now have the highest level of product choice that we have recorded in over a year.
“There are also 365 deals more available now than we recorded in July 2019, demonstrating the strength and resilience of this sector in the aftermath of an unprecedented 18-months.
“The demand for buy-to-let could well remain strong in the months to come as rental demand is prevalent, indicated by recent research from Propertymark’s private rented sector report, May saw a record-breaking number of new prospective tenants registered.
“Whether now is the right time to invest in property may also come down to the desire to earn a decent income.
“Indeed, research from Nottingham Building Society revealed that 61% of landlords surveyed felt property was a better investment due to low interest rates for savings – and this coupled with high demand for rental accommodation could sway new investors to dive into the buy-to-let sector.
“Due to the influence of the pandemic, interest rates for buy-to-let have climbed year-on-year, but this may be linked to the increase in availability of higher loan-to-value products.
“These higher LTV deals usually charge a higher rate and can therefore impact these averages.
“However, despite creeping up a further 0.02 percentage points month-on-month, what is positive is the fact that the overall two-year fixed rate is lower now than in June 2019 – which means those coming off a two-year fixed deal may still find a better deal, depending on how much they have in equity and their circumstances.
“There could still be some understandable hesitation from prospective landlords with some existing investors who could even be considering downsizing their portfolio depending on the pandemic’s impact.
“However, we are beginning to see some improvements in average rates in certain loan-to-value brackets on a month-on-month basis.
“As house prices rise, demand for rental accommodation is high, and savings rates remain poor, therefore, investing in property could be enticing to some.
“It is vital though that would-be landlords and those looking to change their deal seek advice to ensure it’s the right time for them and they find the best package for their circumstances and plans.”
