Independent mortgage sector monitor Moneyfacts says the choice for landlords wanting to borrow remains very strong – but increasingly interest rates are making loans more expensive.

Moneyfacts says there was a small month-on-month dip in the number of products available to landlords, reducing by 61 to leave 3,374 deals on offer at the start of May. 

Compared to this time last year though, there are over 1,000 more BTL products available now and the current availability remains notably above that recorded pre-pandemic – some 2,897.

Rising for a third consecutive month to 3.41 per cent, the average overall two-year fixed BTL rate is at the highest level recorded since September 2015. 

This is 0.51 per cent above where this rate stood at the start of December 2021, prior to any of the four recent base rate increases.

The average overall five-year fixed rate has also increased for a third month in row and sits at 3.56 per cent – Moneyfacts suggests that landlords with a maturing five-year fixed rate from 2017 may therefore be able to secure a more competitive deal as this rate remains 0.12 per cent lower than where it sat in May 2017.

The service also points out that landlords will find the level of choice at 85 per cent loan-to-value of 79 products is only one deal fewer than the 80 recorded last month – which was the highest number recorded since May 2008. 

Also, the average two- and five-year fixed rates for landlords with 15 per cent deposits or equity are the only LTV bracket where rates are lower now (4.80 and 4.93 per cent respectively) than they were at the start of December 2021.

Moneyfacts spokesperson Eleanor Williams says: “Product availability in the buy-to-let sector remains strong, which will be positive news for landlords who saw volumes fall significantly during 2020. There are now 3,374 deals on offer. 

“… Rising interest rates and supply of property are not the only factors that may impact landlords in the months to come, as tax changes and the cost of living crisis may already be pinching the potential profitability of investing in property – although recent information from Hamptons suggested that the first quarter of 2022 was the most active for landlords since 2016 when the Stamp Duty surcharge on the sale of second homes was introduced. 

“That said, rental reform featured in the Queen’s Speech, highlighting the current challenges facing consumers.

“Some landlords could feel that, coupled with other changes such as Stamp Duty surcharges and tax burdens, this is creating a ‘hostile’ environment, which could see some consider leaving the sector altogether.  Providers will need to work hard to attract new business in the months to come.”