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Mortgage bonus for landlords expanding rental portfolios

There’s good news for landlords considering investing or refinancing in the buy to let sector as interest rates are beginning to drop.

Respected independent mortgage market monitor Moneyfacts reports that since the start of May, the average BTL two and five-year fixed rates for all loan-to-values have fallen by 0.04 and 0.05 per cent respectively, and since March this year by 0.10 and 0.11 per cent. 

At 2.95 and 3.30 per cent, both rates are now the lowest they have been since the beginning of this year.


Moneyfacts says that when considering the LTV tiers, the largest reductions since the start of this month have been seen at 65 per cent loan to value. 

At 2.68 and 3.17 per cent, the two and five-year fixed averages of 65 per cent LTVs have dropped by 0.20 and 0.15 per cent respectively since the start of the month - it describes this as “great news for landlords with the required level of deposit or equity.”However, prospective investors with lower levels of deposit or equity should note that although the average two-year fixed rate at 80 per cent LTV slightly increased over the course of this month the number of options available to borrowers in this tier - where rates are traditionally higher due to the higher level of risk - have also risen. 

Moneyfact’s spokesperson Eleanor Williams says: “As lockdown restrictions begin to ease, the prevailing sentiment in the UK seems to be that of optimism. For a sector that has been beset by various changes and challenges over the last five years or so, the BTL market is exhibiting remarkable resilience. 

“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 per cent in Great Britain in April 2021, the fastest rate of growth it has recorded since January 2015.

“Our latest research shows that landlords searching for a deal may be very pleased to see that the overall two and five-year average fixed rates for all LTVs have dropped to the lowest levels since the start of this year, with both having fallen further in the first 21 days of this month." 



She continues: “This seems to show an appetite for business from lenders to cater to borrowers who are keen to invest. Indeed, as providers continue to tweak their ranges, we have seen rate reductions of as much as 0.90 per cent from TSB, while Virgin Money made cuts of up to 1.06 per cent on a selection of its products this month.

“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.”

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