Cheaper mortgage rates for new buy-to-let landlords

Cheaper mortgage rates for new buy-to-let landlords

The week Barclays joined the slew of lenders cutting rates on buy-to-let mortgages.

Buy-to-let mortgage rates are tumbling as lenders unveil cheap deals in a bid to keep landlords in the market.

Figures released by Mortgage Brain, a platform used by brokers, show the average 40%-deposit tracker mortgage is 3% cheaper than it was three months ago, and a 30%-deposit tracker deal is 2% cheaper than in March. This means a landlord taking out a £150,000 mortgage would save £234 a year with a 40% deposit and £144 a year with a 30% deposit.

On Thursday, Barclays joined the slew of lenders cutting rates, including a reduction from 1.59% to 1.55% on its two-year fixed-rate deal to landlords with a 40% deposit. It also cut its 1.88% five-year fix to 1.83% with a minimum 25% deposit.

This followed moves by Halifax on Tuesday, which cut buy-to-let rates on some deals by 0.45 percentage points, and by Nationwide, which trimmed rates on its broker-only products.

Over the past two years, landlords have had to adjust to stricter lending criteria, as well as the phasing out of tax relief on mortgage interest payments by April 2020.

“The buy-to-let market has taken a real hit — there simply is not as much interest from landlords as lenders have been used to over the years,” said Aaron Strutt of broker Trinity Financial .

Lenders have been targeting the buy-to-let remortgage market to drum up some business and, incredibly, they keep cutting rates to tempt landlords in.”

There are also a record number of deals available to new landlords, a sign that lenders are targeting first-timers into the rental market.

There are 1,405 first-time buy-to-let mortgages, up from 645 in 2014, according to Moneyfacts, the price comparison website. The average rate for a two-year fix has plummeted from 4.01% in 2014 to 2.97% this month.

“Entering buy-to-let hasn’t been without its hurdles,” said Rachel Springall of Moneyfacts. “Rules designed to tighten lending don’t seem to have shaken up attitudes to attract first-time landlords.”

The Sunday Times

July 7 2019 12.01am