Buy-to-let product numbers have soared in recent years while rates have ticked up

Landlords have their pick of mortgage deals right now, according to Moneyfacts, which found that the number of buy-to-let products available is currently 2,396.

That’s the highest on record since the beginning of the financial crisis in October 2007, when the total number of available products stood at 3,305.

The financial information provider noted that, since June 2018, the total number of available products for landlords has jumped by 21%, and in the past month alone it has risen by 143 mortgage deals, from 2,253 to 2,396.

Rates creeping up

Average buy-to-let mortgage rates have risen slightly over the past 12 months, with the average two-year fixed rate mortgage increasing by 0.17% from 2.88% in June 2018 to 3.05% this month, while the average five-year fixed rate has risen by 0.11%.

However, the cost of landlord mortgages is still significantly lower than it was in October 2007, when the average two-year fixed rate stood at 6.36% while five-year deals were 6.39%.

Landlords need to look closely

Deciding between a two or a five-year fixed mortgage has just got a little trickier as new analysis reveals the cost of repayments between the two deals has narrowed.

Borrowers often find mortgages with rates fixed for five years more attractive when they are looking for long-term certainty over their repayments, something which can prove beneficial if the Bank of England base rate goes up. Meanwhile two-year deals, which offer a shorter-term option and more flexibility, tend to come with cheaper rates. But new data published by financial data providers,, revealed the gap in average rates between these two types of deal has narrowed, with the difference in price at a seven–year low. This means longer-term options have begun to look more attractive when it comes to value.

Currently the average two-year deal comes with a rate of 2.85% while its five-year counterpart comes in at 3%. This is a difference of 0.15% which is much lower than the 0.42% gap between the two deals recorded last year and has had a direct impact on repayments.

Thinking of becoming a landlord?

One in ten UK adults are interested in becoming landlords and taking out a buy-to-let mortgage in 2019/20, according to a recent survey. A change in income was the main reason people were considering taking their first foray into the world of buy-to-let investment research found. Nearly a third of those considering becoming landlords said they were “encouraged” by current opportunities in the buy-to-let market. Meanwhile over 25% admitted they were going down this route because they had received an inheritance or had become “accidental landlords”.

What can a buy-to-let investment offer you?

Interest only mortgages

Good potential returns on capital invested

Attractive mortgage interest rates

Potentially better returns than on offer at high street banks

North for better returns

Landlords seeking higher rental growth should look to the north, with Scotland having the highest year-on-year rental growth at 1.74%, the Rental Index has found.

In Scotland the average rent is £750, only a little less than the UK’s average, discounting London (£773). Edinburgh City has the highest rental growth of any geography in the UK, with growth of 5.44% year-on-year.

Landlords can rest assured that there is decent rental growth to be found across the UK, particularly if they look north of London. On the face of it, landlords have had a tough time in the past few years, from increased regulatory pressure to a significant increase in stamp duty costs, yet they have managed to shoulder many of these costs without passing them onto tenants.