Number of buy-to-let products rises month-on-month

There were 2,883 fixed and variable buy-to-let mortgage products available at the start of April.

Between the start of March and the start of April, the number of buy-to-let mortgage products increased from 2,844 to 2,883, according to recent analysis from Moneyfactscompare.co.uk.

Although there were more products available at the start of the year (3,114), there are now more deals to choose from than at the same time last year when there were just over 2,600 available.

“The stabilisation of buy-to-let product availability is a positive turn of events for landlords after recent months of contracting choice,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

“Lenders will no doubt need to remain fluid with their product ranges and ensure they can react quickly to market uncertainty, such as volatility surrounding swap rates,” she continued.

Five-year vs two-year

Even though overall choice has risen, a closer look at the data reveals a difference between the product availability of two- and five-year fixed deals.

While the number of five-year fixed rate buy-to-let products rose by 47 month-on-month, the number of two-year fixed rate buy-to-let products available dropped by 19.

However, for both two- and five-year products, there is a greater availability of deals at 80% loan-to-value (LTV) compared to last month, as well as last year.

There are now 136 two-year fixed rate deals and 141 five-year fixed rate deals at 80% LTV available, up from 83 and 75 respectively in April 2023.

“This improvement in choice should be welcomed, but the real challenge surrounds affordability where both the average two- and five-year fixed rates at 80% loan-to-value remain above 6%,” Springall noted.

Challenging environment

Average rates on two- and five-year buy-to-let products increased by 0.01% between March and April to 5.52%.

While these are lower than the average rates at the start of 2024, as well as the average rates in April last year, they are still relatively high compared to 2022 and previous years.

As a result, any buy-to-let investors coming off a two- or five-year fixed deal should be prepared that their new monthly payments could be significantly more expensive than the sum they currently pay.
But high mortgages rates are just one of the challenges that buy-to-let investors have to deal with.

As well as the cost of a mortgage, there are many other factors to consider, including tax implications, the upkeep of the property and finding tenants, to name just a few.

“Indeed, the margin of profit from rental income may well be tighter than in previous years, due to several factors, including the cull of mortgage tax relief and the expense to cover EPC requirements,” Springall explained.

Investing in buy-to-let can be an appealing way to get a return on your money but, whether you let out one property or have an extensive portfolio, being a landlord comes with risk and responsibilities.

Because of this, it’s important to do your research and get professional advice before taking the plunge into the buy-to-let market to make sure it’s the right option for you.