Product availability for buy-to-let mortgages reached a record high and the average two-year fixed rate has dropped below 5% for the first time since September 2022.
Those are the headline findings from the latest market snapshot by independent mortgage monitor Moneyfactscompare.
It says buy-to-let product availability (fixed and variable) rose to 4,144 deals, its highest count since at least November 2011.
And average buy-to-let fixed rates over two- or five-year fixed terms overall have now fallen for the fourth consecutive month.
The average two-year fixed rate is at its lowest point since September 2022, whereas the average five-year fixed rate is at its lowest point since October 2024.
A Moneyfactscompare spokesperson says: “Landlords searching for a new buy-to-let mortgage may be pleased to see a rise in product availability, with the choice of deals soaring to its highest point on record.
“Borrowers concerned about interest rates may also find it encouraging to see the average two-year fixed buy-to-let rate has fallen below 5% for the first time since September 2022 and both the two- and five-year fixed rates have fallen for the fourth consecutive month.
“The average five-year fixed buy-to-let rate is now at its lowest level in over six months, but year-on-year the rate has not dropped as viciously as its two-year counterpart.
“Lenders monitor swap rates to gauge future rate expectations, and when they drop it encourages mortgage rate cuts. Lower buy-to-let rates might create a positive sentiment for new and existing landlords, however, there will be immense pressure on some to turn around a profit in the future.
“Landlords must ensure their property has a minimum Energy Performance Certificate (EPC) rating of C, by 2030 at the latest, according to the Government’s latest proposals.
“This is why a buy-to-let investment might not work for accidental landlords who are not able to fork out the costs to make renovations. Investors typically expect to make better profits if investing in multiple properties, but by the same notion, it can open them to more risk if property prices plummet and they are locked into a mortgage or have no tenant for an extended period of time.
“Finding the right location to enter the market is essential, so it’s wise to expand property searches across other areas in the country outside of the obvious major cities.
“Landlords coming off a low rate fixed deal and needing to refinance will see increasing rents as the easiest way to boost margins.
“Landlords will also need to keep in mind the Renters Right Bill which is expected to come into force either later this year or in 2026. The new laws include abolishing section 21 evictions and fixed-term tenancies, but also new rules on making rent increases. The legislation is designed to protect millions of renters, giving them more security, but understandably this might be the final straw for existing landlords, leading to them exiting the sector.
“Seeking advice before buying any property, such as the workings of setting up a limited company is essential. It is also vital for prospective investors to weigh up the costs involved in entering the buy-to-let market, such as the minimum 5% surcharge on Stamp Duty Land Tax (SDLT).
“An investment in property is more than aiming for a monthly profit, it’s important to understand the longer-term returns of selling the asset, and the tax implications of selling up.”
