Landlords are being spoilt for choice with the number of buy-to-let mortgages rising to a record high, according to new figures.
The total number of buy-to-let deals across the market has reached 4,144, according to rates scrutineer, Moneyfacts.
This is the highest count on record since it began tracking buy-to-let deals in November 2011.
The number of buy-to-let deals has almost doubled since June 2023 and there has been a 42 per cent increase since this time last year, when there were 2,935 deals available.
With competition between lenders on an upward trajectory, mortgage rates have also fallen over the past year.
Moneyfacts says the average two-year fixed rate buy-to-let deal has dropped below 5 per cent for the first time since September 2022.
Sunnier outlook: The number of buy-to-let mortgages has increased while rates are dropping
Investors looking to buy or remortgage with a 25 per cent deposit or equity stake can now get an average two-year fix at 4.96 per cent compared to 5.59 per cent this time last year.
On a £200,000 interest only mortgage, that’s the difference between paying £826 a month and £932 a month.
Those with a 40 per cent deposit or equity stake can secure 4.46 per cent on average, according to Moneyfacts, down from 5.25 per cent this time last year.
On a £200,000 interest only mortgage, that’s the difference between paying £743 a month and £875.
It’s a similar story for those looking to fix for five years, albeit not quite as extreme.
The average five-year fix for those buying or remortgaging with a 40 per cent deposit or equity stake is now 4.51 per cent, down from 4.93 per cent a year ago.
Rachel Springall, finance expert at Moneyfacts thinks landlords should benefit from the rise in available deals.
‘Both the two- and five-year fixed rates have fallen for the fourth consecutive month,’ says Springall.
‘The average five-year fixed buy-to-let rate is now at its lowest level in over six months, but year-on-year the rate has not dropped as viciously as its two-year counterpart.
‘Lenders monitor swap rates to gauge future rate expectations, and when they drop it encourages mortgage rate cuts.
‘Lower buy-to-let rates might create a positive sentiment for new and existing landlords, however, there will be immense pressure on some to turn around a profit in the future.’
What are the best rates?
Many of the lowest buy-to-let mortgage rates come with staggeringly high fees. These can be as high as 10 per cent of the total mortgage amount in some cases.
On a £200,000 mortgage that would equate to £20,000.
This means it’s essential for landlords to look at the overall cost of the mortgage and factor in both the fees and the interest rate.
While buy-to-let rates have improved on average compared to last year, many investors will find they can now secure rates below 4.5 per cent and do so without incurring massive product fees.
For example, a landlord remortgaging to a five-year fix with at least 40 per cent equity in the property can get 4.28 per cent with NatWest, with a £59 fee or 4.29 per cent with HSBC with no fee.
A £200,000 mortgage fixed at 4.29 per cent on an interest only basis would cost £716 a month.
The best two-year fixed rates are slightly more expensive, but only marginally.
A slight quirk in the market is that there is little difference at present between the best rates for those buying with or remortgaging with 25 per cent deposits or equity and those doing so with 40 per cent.
For example, HSBC is offering those remortgaging at 75 per cent loan-to-value the chance to fix for five years at 3.94 per cent, albeit with a £3,999 fee attached.
The lender is also offering a £1,999 fee option with a rate of 4.19 per cent.