OPPORTUNITIES WILL CONTINUE TO EMERGE FOR LANDLORDS AS BTL CHOICE WIDENS
In last month’s article I looked at how landlords, lenders and the general buy-to-let market has had to adapt to changeable market conditions before, during and after the lockdown. During this, I touched upon how many first-time buyers have been hit with a double whammy as the availability of low-deposit deals has plummeted, while rates on those remaining have surged since lockdown. And it’s not only products across the residential mortgage market which are fluctuating.
In terms of product numbers, the volume of buy-to-let deals continues to increase from the lows seen during the Covid-19 pandemic. According to the latest data from Moneyfacts, buy-to-let product choice has risen steadily with 143 more products now available – at the time of writing – when compared to the start of August. Maintaining some perspective, there are still over 1,000 fewer BTL products on the market than in March 2020.
However, whilst the number of available products has increased, so too have average rates. The average two-year fixed rate for all LTV brackets is now reported to be higher than at the start of the crisis, up 0.09% to 2.86% compared to the 1st of March. The equivalent average five-year fixed rate is suggested to now sit at the same level over the same time period – 3.24%. Average two- and five-year fixed rates at both ends of the LTV spectrum are said to be higher than pre-pandemic levels. At 60% LTV these are now 2.52% and 2.91% respectively, 0.63% and 0.60% above where they were in March, and at 80% LTV the equivalent rates have increased by 0.42% and 0.30% to hit 3.98% and 4.28%.
So, what does this all mean for landlords, developers and investors?
As outlined in the data, since 1 August the number of BTL products has risen by 143, with 57 of those new products becoming available since the start of September. This additional choice represents good news for those who may be looking to purchase or refinance rental properties and – even though rates appear to be slowly increasing – some highly competitive deals remain available.
For those in need of some longer-term stability, average five-year rates sit at the same level as they did in March (3.24%) but it’s worth noting that this figure has increased by 0.18% since the beginning of August. We can’t be sure if this trend will continue – although it is looking increasingly likely – and landlords potentially need to act now to secure these types of deals.
More good news is emerging as, since mid-August, 85% LTV deals have become available to buy-to-let borrowers once more. This is indicative of a rise in the appetite amongst lenders to actually lend and a very slight loosening of the risk burdens being placed on them. And with rental demand increasing, opportunities will continue to emerge for those landlords, developers and investors who are in the right financial position to take advantage of them and who are maximising the value attached to good, professional advice along the way.
Ying Tan - 08.10.2020 | Posted in