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The number of buy-to-let mortgage products hits 12-year high

Consumer choice of buy-to-let (BTL) mortgage products has reached a 12-year high, according to new figures.

The data, taken from the latest Moneyfacts report, shows that the number of BTL products has increased by 21% in the past year to a total of 2,396, which is the highest figure since October 2017 when there were 3,305 products available.

Despite the increase in competition, the average BTL mortgage rates have risen over the past 12 months, with the average two-year BTL fixed rate mortgage increasing by 0.17% from 2.88% in June 2018 to 3.05% this month, while the average five-year BTL fixed rate has risen by 0.11% to 3.54%, compared to 3.43% in June 2018.

But both rates are still much lower than in October 2007, when the average two-year BTL fixed rate stood at 6.36% and its five-year counterpart stood at 6.39%.

The table below highlights how much the market has improved in the last year alone.

  All available BTL products Two-year fixed rate BTL mortgage Two-year fixed rate BTL mortgage Five-year fixed rate BTL mortgage Five-year fixed rate BTL mortgage
  Product numbers Product numbers Average rate Product numbers Average rate
Oct-07 3,305 409 6.36% 181 6.39%
Jun-18 1,929 678 2.88% 637 3.43%
May-19 2,253 739 3.02% 730 3.53%
Jun-19 2,396 802 3.05% 785 3.54%

Darren Cook, finance expert at Moneyfacts, commented: “The BTL market has experienced a number of regulatory changes during recent years, however, it seems that product competition within this specialised mortgage area is continuing to grow. A 21% increase in availability to 2,396 products over the past 12 months indicates that providers are keen to offer potential BTL investors plenty of choice within the sector.

“Despite this increasing competition in terms of the total number of products available over the past year, average rates have unfortunately not fallen, and have instead followed suit, with the average two-year fixed rate increasing by 0.17% to 3.05% and the average five-year fixed rate increasing by 0.11% to 3.54% over the same period.

“The largest concentration of BTL product choice can be found at the maximum 75% loan-to-value (LTV) tier, where there are currently 352 (44%) two-year fixed rate products available and 374 (48%) five-year fixed rate products available. Coincidently, the average fixed rates at the 75% LTV tier for the two and five-year sectors are currently 3.05% and 3.55% respectively, equalling or near-equalling the average rates for both terms across all tiers.”

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