Buy-to-let mortgages shift changing landscape for landlords

Landlords are faced with fewer mortgage options as many buy-to-let mortgages are taken off the market.

Fewer buy-to-let mortgages

Although the number of mortgages available has increased by 370 products since May, when the property market reopened, UK landlords are still facing far fewer options than they had previously. Since the beginning of March 2020, the number of fixed-rate buy-to-let mortgages has dropped by over a third (35%). 

In the current landscape, there are only 1,535 deals available. Prospective borrowers with the smallest available deposits have suffered the most as the majority of the deals withdrawn have been those with a higher loan-to-value  80% and 85%). 

For the lucky few borrowing at a 60-70% loan-to-value, there is still a reasonable market offering. Accord Mortgages is the latest to reduce the number of buy-to-let mortgages available, reducing from 57 to 27 effective from Thursday 29th October. 

Mortgage rates

Although there are fewer available options, this could be a positive as it provides a more streamlined offering for landlords. In other good news, the costs of buy-to-let mortgages have shown only a slight increase since the pandemic. 

At the start of March, the average rate for a 2-year fixed-rate deal was 2.9%; this is only slightly higher now at 3.1%. Consequently, the reduced options does not mean that it is more difficult to obtain a buy-to-let mortgage. The prospects are even better for people looking to secure longer-term mortgages. On five-year deals, the increase is even smaller; from 3.39% to 3.56%. 

Buying more properties

The negligible increase in mortgage cost combined with the stamp duty holiday has been a winning combo for many landlords, something that has seen the likes of alternative finance such as bridging bounce back in Q3. 

Those able to borrow at a lower loan-to-value have been fortunate in this climate of the housing market and have seen it as an opportunity to expand their property portfolios. According to money experts at Which, the current average saving on property is around £4,500. 

Additionally, the changing shift in consumer preferences, as guided by the ever-changing pandemic guidelines, have meant a surge in holiday let mortgages. The rise of the so-called “staycation” has meant that many UK residents have chosen to holiday closer to home. This, again, may be an appealing prospect for UK landlords, and an opportunity to capitalise a captive market.