Investors are being encouraged to review their portfolios promptly as the market for buy-to-let landlords seeking mortgages has improved greatly over the last few weeks.
New data shows positive growth in the mortgage sector following further signs of recovery in the UK BTL market. In addition, the range and variety of products available to BTL landlords seeking to borrow to invest is almost back to pre-pandemic levels. Another significant benefit is that interest rates on a spread of higher loan-to-value (LTV) products have been reduced.
This follows in the wake of a majority of lenders restricting their higher LTV products for several weeks at the start of the crisis.
New data from Moneyfacts reveal a more risk-tolerant culture developing in the mortgage market. Consequently, landlords are being encouraged to take advantage of the expanding market. The current lending climate is positively upbeat for most investors at the moment, either for recalculating portfolio financing or investing in new property.
Buy-to-let product offers have soared by 280 between May and June of this year, increasing the total number of mortgage options from 1,455 to 1,735. The jump is likely to be due to mortgage lenders adjusting their focus to include new as well as existing borrowers.
Additionally, as the Government released new advice on how to conduct valuations in person, lenders were able to reintroduce a vast number of products that had been put on one side.
Hundreds of new deals available
This means that BTL landlords with a long-term view could take advantage of the huge variety in mortgage options. Five-year fixed-rate mortgages have been the most popular type, with numbers increasing from 480 to 607 over the past month.
The positive growth in choice is reflected in the higher LTV tiers, with deals for landlords having only a 25pc or 20pc deposit and competition keeping pace across two and five-year fixed rate options.
The fact that providers concentrated on supporting existing customers and physical valuations were impossible resulted in many lenders reducing their offers to lower risk, lower LTV products, which left those with less equity or lower deposits with little or no choice.
As regards rates, borrowers wishing to fix for five years with 80pc LTV will benefit from the largest rate reduction. The average has fallen by 0.67pc, from 4.32pc to 3.65pc between May and June.
Eleanor Williams, Finance Expert at Moneyfacts, said that the Bank of England base rate remains at its lowest ever level of 0.10pc which does not offer investors any incentive to save money in a bank or building society.
By contrast, Ms Williams added, those thinking of investing their money in property now that the mortgage market has reopened may decide that the present is a worthwhile time to explore their options. Especially as rates are becoming more competitive and product choice has begun to increase this month.
Positive growth good news for landlords
Rightmove‘s survey reviewing the UK rental market has also provided a further spur to the sector, according to Moneyfacts. The data showed that tenant demand for rental properties rose by 33pc in May 2020 compared to the same month in 2019. Therefore, the recent increase in buy-to-let offers will be welcomed by landlords seeking to meet this demand.
As far as planning for the future is concerned, Ms Williams believes that the full economic impact of the pandemic is still unclear for both tenants and landlords, although there are signs that the buy-to-let market may be beginning to recover.
Nonetheless, she advises those who are in a position to think about profiting from a possible fall in house prices to expand their property portfolios or those seeking to switch their current deal, to move quickly.
She also urges investors who wish to remortgage or buy property to use the services of an independent financial adviser who should be able to offer guidance on options in regard to individual needs and circumstances.