Better competition for landlords as buy to let rates are at their lowest ever

More deals and lower rates in the thriving buy to let market have reintroduced competition to benefit landlords

Following in the footsteps of homeowner mortgages, buy to let rates have dropped to the lowest levels ever recorded according to figures from Moneyfacts.

Average buy to let borrowing currently stands at only 3.82 per cent across all terms while the amount of deals secured within the sector rose to 811 from 757 in just one month.

In February 2012, the average buy to let rate was 5.03 per cent but by February the following year this had reduced to 4.68 per cent. Another year later, in February 2014, the figure had reduced even further to 4.22 per cent.

Yearly reductions in the buy to let variable rate have also been recorded over the same period.

Today, it stands at just 3.63 per cent compared to 4.17 per cent this time last year, 4.43 per cent in February 2013 and 4.46 per cent in February 2012.

Loosening up

Comparison site Moneyfacts believe the plummeting rates are a result of a thriving buy to let market in which lenders are beginning to re-introduce competition across mortgage deals.

It claims that during the same period last year, 2,662 deals were secured by borrowers seeking loan to values ranging from 100 to 75 per cent. This number has now risen to 2,943.

The organisation also explained that lenders are starting to “loosen up” after a few years of risk aversion as they no longer feel the need to restrict borrowing to those with high deposits or equity.

This means restrictive loans at 60 per cent, 65 per cent and 70 per cent or below have declined from 1,021 to 845.

Lenders have also been able to raise capital at very low costs thanks to a range of funding sources – according to statements from the Council of Mortgages Lenders (CML) earlier this month.

A regulated mortgage study carried out by CML also highlighted that during November 2014 the average new tracker mortgage rate had fallen to 1.96 per cent; the first time it dropped below 2 per cent.

Sylvia Waycot, Editor for Moneyfacts.co.uk, said that this is not an unexpected revelation:

“When you consider how dire savings rates are it is hardly surprising that buy to let is proving popular with investors, and this is likely to increase once the rules relaxing the drawdown of pension pots in April come to fruition.”

For more information on mortgage products and data surrounding mortgage finance please visit our Research Data page.

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