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Buy-to-let mortgage market shows tentative signs of recovery

There are emerging signs of recovery in the buy-to-let mortgage market, following the major initial impact of the Covid-19 pandemic-induced lockdown, new figures show. 

The latest research carried out by Moneyfacts.co.uk has found that since May, the number of buy-to-let deals - fixed and variable - available at all loan-to-values (LTVs) has increased by 283, with the number of two-year fixed deals increasing by 134 and the number of five-year fixed deals increasing by 164. 

The product choice at 75% LTV has increased by 46 two-year fixed rate deals, which 54 more products are available in the five-year fixed rate bracket.

In addition, there are 26 more two-year fixed rate products at 80% LTV, while there are 20 more options available for those seeking a five-year fixed rate over the month.

Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “The mortgage market as a whole remains an evolving and complicated landscape, as the ongoing impact of the recent lockdown has affected product choice and rates.

“However, as our latest research shows, the buy-to-let sector has adapted well and there are indications that landlords may have cause for positivity.”

2020 BTL mortgage product number analysis
  January March April May July
BTL product count - fixed and variable rates 2,583 2,897 1,887 1,455 1,738
Two-year fixed rates BTL - all LTVs 823 914 610 491 625
Five-year fixed rates BTL - all LTVs 879 1,000 695 480 644
2020 BTL average rates analysis
  January March April May July
BTL two-year fixed - all LTVs 2.82% 2.77% 2.71% 2.51% 2.61%
BTL five-year fixed - all LTVs 3.19% 3.24% 3.16% 2.94% 2.97%

Since January, the number of 80% LTV BTL mortgage deals available has dropped sharply, with two year fixed rate deals falling from 119 in January to just 31 available in July. 

Meanwhile, the volume of five year fixed rate deals has fallen from 110 to 19 during the same period of time, making it harder for landlords with an 80% LTV to get a mortgage deal.

2020 80% LTV BTL mortgage product number analysis
  January March April May July
Two-year fixed rates BTL - 80% LTV 119 141 57 9 31
Five-year fixed rates BTL - 80% LTV 110 150 69 6 19
2020 80% LTV BTL average rates analysis
BTL two-year fixed - 80% LTV 3.64% 3.56% 3.80% 3.61% 3.18%
BTL five-year fixed - 80% LTV 4.03% 3.98% 4.18% 4.32% 3.82%

Landlords looking for a mortgage at a 60% LTV will have seen the number of products available increase since January. Since the beginning of the year, the number of two-year fixed rate deals available at a 60% LTV increased from 126 to 144 in July, and the number of five-year fixed rate deals increased from 128 to 146. 

But between May and July there was a marginal decline in the number of 60% LTV deals available, with two-year fixed rate products falling from 148 to 144 and the number of five-year fixed deals falling from 155 to 146.

Williams added: “With rates as low as 1.19% available in the BTL chart today, it seems that there are some highly competitive deals available to landlords.

“Saying this, the BTL mortgage market has not seen a harmonious return to pre-lockdown competition and landlords looking for a 60% LTV will have seen average rates rise since the beginning of the year, while 80% LTV rates have fallen.”

2020 60% LTV BTL mortgage product number analysis
  January March April May July
BTL two-year fixed - 60% LTV 126 124 129 148 144
Five-year fixed rates BTL - 60% LTV 128 133 140 155 146
2020 60% LTV BTL average rate analysis
BTL two-year fixed - 60% LTV 1.92% 1.89% 2.24% 2.39% 2.28%
BTL five-year fixed - 60% LTV 2.32% 2.31% 2.62% 2.76% 2.65%
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