Amidst a backdrop of lingering uncertainty surrounding mortgage rates, a silver lining emerges for property investors as the average buy-to-let mortgage rates have once again experienced a dip. This news comes at a crucial juncture, providing landlords and investors with a potentially opportune moment to secure new borrowing or remortgage their properties.
Recent data indicates that buy-to-let mortgage rates have reached their lowest point since September 2022. However, the window of opportunity may be fleeting, as there are indications that rates could see a slight uptick in the coming days and weeks.
In the past week, several lenders have responded to the news of the UK slipping into a technical recession in the final quarter of 2023 by slightly raising their costs. This move was prompted by an increase in swap rates, which lenders utilize to determine mortgage prices, leading to certain products being shifted to higher rates.
While this development warrants attention, optimism prevails, with the expectation that a reversal may occur if the economic outlook improves. The widely anticipated reduction of the Bank of England’s base rate later this year is expected to contribute to this positive shift.
In the buy-to-let mortgage space, the latest report from Moneyfactscompare reveals that rates hit a low this month not seen since approximately 15 months ago, following a gradual decline alongside the broader market.
Despite the decrease in rates, the market has witnessed a reduction in the number of buy-to-let mortgage products available due to increased volatility and certain lenders withdrawing specific products in recent weeks. Moneyfacts found that the total number of products decreased from 3,114 in January to 2,838 this month.
Finance expert Rachel Springall from Moneyfactscompare.co.uk advises landlords to act swiftly, emphasizing the possibility of fixed rates edging up in the coming weeks due to volatile swap rates. She encourages landlords not to delay in securing a deal to avoid potential disappointment.
While the market experiences fluctuations in product availability, the current trajectory presents an opportune time for landlords and property investors to consider securing a buy-to-let mortgage. However, it is essential to acknowledge that rates can fluctuate based on various factors, making it crucial for borrowers to seek advice to navigate the available options.
Adding a layer of resilience to the current scenario is the robust state of the UK’s rental market. Rental price growth on newly let properties has seen an 8.3% year-on-year increase, according to Hamptons. Furthermore, indications suggest that rental growth is expected to outpace inflation for the remainder of 2024, providing landlords with an additional buffer in the face of mortgage rate considerations.
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