Buy-to-let choice recovers from market turmoil

Despite falling, the average two- and five-year fixed rates sit above 5%.

Overall buy-to-let mortgage availability has now returned to its highest count since last July, as the market continues to recover from a mass product drop.

The drop came in the aftermath of the mini-Budget, which saw a mass withdrawal of residential and buy-to-let mortgages.

In an article published in November, Moneyfacts reported signs of recovery in the buy-to-let space. Buy-to-let product availability had recovered from 988 mortgages in October to 1,769 on 25 November 2022.

As of March, there are 2,400 options in this sector.

Both the average two and five-year fixed rates rose to 6% towards the tail end of 2022, but thankfully, both rates have slowly dipped below this level.

As of March, the average two-year fixed deal stands at 5.81% while the five-year fixed deal sits at 5.72%.

As both the average two- and five-year fixed rates sit above 5%, compared to around 3% a year ago, it’s clear that landlords are likely to see their monthly repayments much higher than they perhaps anticipated.

There may even be those looking to sell up this year because of the rise in interest rates, tax changes for holiday lets and Capital Gains Tax or even EPC requirements – all of which dampen profit margins or investment returns on sale of a property.

Landlords may be waiting for fixed mortgage rates to come down further or indeed opt for a tracker mortgage to give them more flexibility to eventually switch their deal.

However, interest rates are only part of the decision-making process when entering a buy-to-let investment. Whether that be for new or existing landlords, it is always wise to seek advice to ensure it is the right time to commit to a deal.