BTL mortgage rates fall to lowest level since start of 2021

Landlords looking to lock into a fixed buy-to-let (BTL) mortgage deal will be pleased to see that the average two and five year fixed rates have fallen since the start of May and are currently at their lowest levels since the beginning of this year.

Our research into the BTL mortgage market has found that since the start of this month, the average two year fixed BTL rate has fallen by 0.04%, down from 2.99% on the 1 May to 2.95% on the 21 May. Meanwhile, the average five year fixed BTL rate has fallen by 0.05% during this same period, down from 3.35% to 3.30%. “This seems to show an appetite for business from lenders to cater to borrowers who are keen to invest,” explained Eleanor Williams, finance expert at Moneyfactscompare.co.uk. “Indeed, as providers continue to tweak their ranges, we have seen rate reductions of as much as 0.90% from TSB, while Virgin Money made cuts of up to 1.06% on a selection of its products this month.”

Falling BTL mortgage rates will not only benefit landlords looking to remortgage, but will also be welcomed news to investors considering investing in a BTL property, especially as average rents have risen since April. Williams revealed: “While it goes without saying that the last year has presented great challenges to many investors in the sector, the latest Lettings Index from Hamptons illustrated that rents have risen by 5.9% in Great Britain in April 2021, the fastest rate of growth it has recorded since January 2015.”

She added: “Hampton’s indicated that the rise in rental growth may well be linked to the fact that there were 45% fewer homes available for rent in April 2021 compared to April 2019. For investors contemplating an expansion into the BTL sector, demand from tenants is booming and while it remains difficult to earn a decent return on many forms of investment, it’s understandable why rental property could be a tempting option. Those considering taking the plunge, or those who may wish to discuss how to manage their existing portfolios, would do well to secure the up-to-date market knowledge, advice, and support of a qualified broker, who should be able to take their plans and circumstances into account.”

The lowest two year fixed rate currently available in our BTL chart is a deal from The Mortgage Works offering 1.19% (4.5% APRC) fixed until 31 July 2023 and then reverts to 4.74% variable. This deal is available at a 65% loan-to-value (LTV).

The lowest two year rate at a 75% LTV comes from Santander, which offers 1.55% (3.2% APRC) fixed until 2 September 2023 and then reverts to 3.35% variable.

The lowest five year fixed BTL rate in our charts comes from The Mortgage Works with a deal available at a 65% LTV, offering 1.64% (4.0% APRC) fixed until 31 July 2026 and then reverts to 4.74% variable.

The lowest five year rate at a 70% LTV comes from Principality Building Society, which offers 1.99% (3.8% APRC) fixed until 30 September 2026 and then reverts to 4.40% variable.