Eleanor Williams, Finance Expert at Moneyfacts.co.uk, said:

“As we pass the 25^th anniversary of the first BTL mortgages as we know them, our data gives landlords cause for positivity, as the number of products for them to choose from has risen by 153 this month, and at 2,968 is 1,162 higher than this time last year (1,806 Sep 2020). The resilience of this sector in the aftermath of a challenging 18-months is clear as choice now exceeds the number of deals available before the pandemic in March 2020 by 71 options.

“Further cause for celebration is that the interest charged on BTL mortgages is falling, with the average overall two- and five-year fixed rates dropping by 0.03% and 0.04% this month, to 2.94% and 3.25% respectively. Compared to a year ago, on face value borrowers will notice average rates are higher today. However, the rates a year ago were driven by the impact of the pandemic and product availability was low – particularly in the higher LTV tiers where rates are generally higher due to pricing for risk. As it stands, compared to a pre-pandemic September 2019, both the average two- and five-year fixed BTL rates are lower by 0.03% and 0.19% respectively, indicating rate pricing competition for those looking for new finance for an investment property. 

“As rental demand remains high, BTL could be a worthwhile investment and the rise in overall product choice and fall in average rates is positive. However, a note of caution as lenders’ enthusiasm to improve ranges seems to dissipate at the top end of the BTL LTV spectrum. The maximum 85% LTV bracket has not only seen availability stall at 19 deals, but also the average two- and five-year fixed rates on offer for landlords with just 15% equity or deposit are a quite staggering 0.88% and 0.44% above their September 2019 equivalents, indicating that while lenders are competing for business, this eagerness does not seem to extend to the riskier end of the market yet.”