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Buy-to-let fixed rates drop to lowest points since 2022

by | Feb 26, 2024

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The buy-to-let sector has seen fixed rates fall to their lowest point since September 2022, according to the latest analysis by Moneyfactscompare.co.uk.

  • Average fixed rates have fallen month-on-month, both over a two-year or five-year fixed term, standing at their lowest points since September 2022. Six months ago, these rates were the highest on Moneyfacts’ electronic records (going back to November 2011).
  • Overall buy-to-let product availability (fixed and variable) has fallen month-on-month. However, compared to six months ago, there are around 250 more options.
Buy-to-let market analysis
Product numbersFeb-22Feb-23Aug-23Jan-24Feb-24
BTL product count (fixed and variable)3,5402,2462,5853,1142,838
Two-year fixed rate BTL all LTVs1,146539676968972
Two-year fixed rate BTL at 60% LTV11190677270
Two-year fixed rate BTL at 75% LTV469271328416420
Two-year fixed rate BTL at 80% LTV1496367108120
Five-year fixed rate BTL all LTVs1,3368651,1071,3241,215
Five-year fixed rate BTL at 60% LTV126103798373
Five-year fixed rate BTL at 75% LTV578412558639588
Five-year fixed rate BTL at 80% LTV1765676102129
Average ratesFeb-22Feb-23Aug-23Jan-24Feb-24
Two-year fixed rate BTL all LTVs2.90%5.95%6.88%5.95%5.49%
Two-year fixed rate BTL at 60% LTV2.07%5.55%6.64%5.63%5.22%
Two-year fixed rate BTL at 75% LTV2.86%5.95%6.87%5.94%5.51%
Two-year fixed rate BTL at 80% LTV3.82%6.89%7.54%6.65%6.30%
Five-year fixed rate BTL all LTVs3.16%5.85%6.72%5.91%5.48%
Five-year fixed rate BTL at 60% LTV2.33%5.37%6.18%5.37%4.87%
Five-year fixed rate BTL at 75% LTV3.14%5.95%6.76%5.94%5.51%
Five-year fixed rate BTL at 80% LTV4.03%6.86%7.29%6.65%6.20%
Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Landlords concerned about interest rates may be pleased to find that both the average two- and five-year fixed buy-to-let rates have dropped to their lowest points since September 2022. These rates sat at a record-high just six months ago, so this is positive news for borrowers who have been patiently waiting for fixed rates to come down. However, it is possible fixed rates will edge up slightly in the coming weeks due to volatile swap rates, so those looking to refinance may wish to secure a deal quickly to not be left disappointed.

 
 

A notable area of volatility in the market has surrounded product choice; the overall count has dropped month-on-month, but availability is up by around 250 deals compared to six months ago. The ebb and flow of deals makes it essential for prospective borrowers to seek advice to navigate the options available to them. Deeper analysis of product choice shows five-year fixed offers have waned month-on-month, but two-year fixed offers are resilient. It will be interesting to see how lenders adjust their ranges in the weeks to come. There are more two and five-year fixed mortgages now than there were six months ago.

Those who are considering the opportunity to become a landlord will find rental growth on a newly let property across Great Britain rose 8.3% year-on-year, according to a study by Hamptons, but this was the slowest pace for 13 months. However, Hamptons signalled that rental growth is expected to run ahead of inflation for the remainder of 2024. Still, there will be existing landlords concerned about the ongoing profitability of a buy-to-let portfolio as their margins have been impacted by a cull in mortgage rate tax relief, tax changes for CGT and holiday lets, plus new EPC requirements. Any investor would be wise to seek advice before they commit, and providers will need to work hard to encourage borrowers to refinance and attract new business.”

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