Low LTV buy-to-let rates on the rise

19 August 2020 | General

Buy-to-let rates to 60% loan-to-value have risen significantly since March, Moneyfacts’ buy-to-let product data shows.

The typical cost of a 60% LTV 2-year fix is currently 2.42%, up from 1.89% in March. For a 5-year fix to 60% LTV the average cost has risen from 2.31% to 2.76%.

While this may be bad news for landlords, the cost of 80% LTV 5-year fixes has fallen over the same period, from 2.98% in March to 3.78% in August.

Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Landlords looking to invest in the BTL sector could see this as an opportune time to explore their options, especially if they think that average rates may continue the upward trajectory we have witnessed over the last two months.

“However, economically, we remain in unchartered waters, with many providers exercising caution in their underwriting, so landlords or potential investors should ensure they thoroughly research and plan ahead in order to protect their investments.

“In these ever-fluid times, seeking advice and support from independent, qualified professionals could be invaluable in navigating their choices.”

The sector has slightly contracted since 1 July, with a fall of 78 products, leaving 1,660 deals available.

Kevin Roberts, director, Legal & General Mortgage Club, said: “The buy-to-let market has seen its fair share of challenges in recent times, but it’s an area where we are now seeing increased activity from consumers since the lockdown eased.

“Not only are we seeing more existing landlords expanding their portfolios, but new ‘part-time’ landlords are also looking to take advantage of the recent stamp duty holiday to step into buy-to-let. Searches by advisers for mortgages for first-time landlords have increased four-fold since April and in many cases, these individuals are seeking out guidance from independent mortgage advisers ensure they are finding the best mortgage deal.

“As thousands of Britons plan staycations for the foreseeable future, we are seeing a resurgence in the holiday let market too. Searches for mortgages on AirBnB style ventures have risen to be the second highest buy-to-let search criteria by advisers, as investors look to take advantage of Brits staying the UK for their holidays.”

This post has originally been featured in Property Wire.