Our mortgage partner, Hamilton Fraser Total Landlord Mortgages reports on the latest drop in mortgage rates and what this means for landlords.

There’s never been a better time to take out a buy to let mortgage as interest rates dip to less than one per cent.

Lenders are locked in a fierce fight to attract more borrowing in a cautious market with fewer landlords buying or remortgaging homes.

The latest data from market regulator, the Financial Conduct Authority (FCA) shows the number of buy to let loan advances are falling – from 14.4 per cent of all loans in the second quarter of 2020 to the current level of 11.3 per cent of the market.

At the same time, mortgage market monitor Moneyfacts says 2,968 buy to let mortgages are available. There are 71 more loans on offer than there were pre-pandemic in March 2020 and the highest number available since before the global financial crisis in 2007 (3,305).

Lenders are slashing rates or tweaking terms and conditions almost daily in a bid to stay ahead of the market.

The current mortgage market

The Mortgage Works, buy to let brand of Nationwide, were the first company to dip a toe in the sub one per cent water.
However, to apply for their sub one per cent deal, borrowers must have a 35 per cent deposit and fork out a fee of two per cent of the loan value.

Previously, the lowest rate was Barclays Bank’s 1.16 per cent deal that came with a £1,549 fee.

Next to follow was the Co-Operative Bank’s Platform, which also lowered rates to 0.99 per cent. Although, Platform’s deal comes with demanding criteria to fulfil.

The loan is a two-year 0.99 per cent fix at 60 per cent loan to value with a fee of £2,450, which is only available on buy to let purchases between £350,000 and £500,000. Borrowers must have a £60,000 a year household income and no more than three homes to rent. Both deals are for buying or remortgaging rental properties.

Why are buy to let mortgages so cheap?

Buy to let mortgage rates are dropping for several reasons:

  • Lenders have agreed to 90 and 95 per cent loan to value deals for many house buyers, and they need to balance out the risk in their portfolios with more dependable 60 and 65 per cent loan to values
  • Borrowing money is cheap for banks, the official bank rate is just 0.1 per cent; commercial rates are low enough to leave a margin even at under one per cent
  • According to a report from the housing portal Zoopla, the stamp duty holiday buoyed the market, sending house prices surging upwards at an average of £44 a day
  • Banks are flush with money to lend due to customers saving more during the coronavirus pandemic lockdowns
  • Offering cut-rate deals is a proven way to increase market share for lenders

With limited company fixed rates starting around 2.5 per cent, the market is predicting further cuts soon.

Have you got the best mortgage rate?

Experienced landlords know that freeing up costs is one way of improving cash flow and profits without raising rents.
Refinancing is a good way of cutting costs – and with buy to let rates falling to their lowest ever, now is an excellent time to find out how much you could save by switching lenders.

As every penny counts for property investors, Total Landlord Mortgages has some unmissable mortgage deals with rates starting at the market rock-bottom of 0.99 per cent.

Are you interested in finding out more about the exclusive deals? Call Total Landlord Mortgages today on 0333 224 8918 to discuss your mortgage requirements or request a call back here.

What’s happening in the buy to let market?

Property portal Zoopla says the number of homes for sale that were rentals has grown from three per cent of the market two years ago to eight per cent now.

Even more landlords are selling properties in London, where 13 per cent of homes for sale were once buy to lets.

The trigger to sell is the lure of cashing in on rising prices. On average, home values have added £44 a day for the past six months, says Zoopla, up from £30 a day for the previous half-year.

The firm’s data reveals the average home price is at a record £235,000.


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