The number of buy-to-let products on the market has reduced month-on-month, with a fall of 78 products since the start of July.
A Moneyfacts.co.uk study into the BTL market found that despite the drop in product numbers, there are significantly more deals available now – 1,660 – than on 1 May, when just 1,455 products were on offer.
The average two and five-year rates for all loan-to-value brackets are lower now than they were at the start of the Coronavirus pandemic, down 0.05 per cent and 0.13 per cent to 2.72 per cent and 3.11 per cent respectively compared to 1 March.
However, in the two and five-year 60 per cent LTV space, rates have increased, now 0.53 per cent and 0.45 per cent respectively above rates in early March.
Therefore, Moneyfacts suggests that landlords with higher levels of equity should consider their mortgage options before rates potentially increase further.
Moneyfacts finance expert Eleanor Williams says: “Over the last six months, the BTL sector has been a little more resilient than the residential market in terms of product choice. However, this sector has contracted since 1 July, with a fall of 78 products, leaving 1,660 deals available. While remaining some way below the 2,897 deals offered before the crisis took hold, it is important to note that this is still an improvement on the 1,455 products the market had reduced to as of 1 May this year.
“Now that the UK has officially fallen into a recession, some landlords could be concerned regarding the future of their beleaguered sector. However, the increase to the stamp duty land tax threshold will have come as welcome news to many landlords and potential investors in the sector, who may be enticed by the potential savings this offers. Additionally, recent survey information from ARLA Propertymark* indicates that the number of new prospective tenants has risen to a year-on-year high, which could be indicative of the fact that in times of economic uncertainty, people tend to delay making significant financial commitments such as purchasing their own home, which could result in an increase in rental demand.
“Another possible cause for positivity is demonstrated by the overall average rates for two and five-year fixed rate BTL deals. These are 2.72 per cent and 3.11 per cent respectively, which means that both rates are lower than they were in March, signifying that there are still competitive deals to be had in this current low base rate environment and an indication of an appetite to lend from providers in this sector. However, a note of caution, as since 1 August, average two and five-year rates have risen by 0.06 per cent and 0.05 per cent respectively – a fact that may prompt some investors to consider their options before these potentially increase further.”
