Lenders lure buy-to-let investors with low rate deals

April 16, 2016 by Brendan O'Neill

Lenders

Despite landlords rushing to complete deals on new properties before the new stamp duty changes came in to effect in April, lenders are attempting to lure investors by offering competitive low rate deals.

The latest research by Moneyfacts.co.uk indicates that although it may have seemed likely that buy-to-let interest rates would increase, lenders are now offering dramatically reduced mortgage rates.

Over the last five years, mortgage rates for the buy-to-let sector have steadily fallen, and this is continuing despite stricter affordability checks, higher stamp duty rates and tax increases. Fixed rate deals appear to be particularly beneficial for landlords, according to Moneyfacts.

Expert in finance, Charlotte Nelson, said:

“The BTL market has faced intense pressure recently, but despite this, rates have continued to fall across all fixed sectors. For example, the average two-year fixed rate has fallen by 0.71% in just two years, while the average five-year fixed rate has dropped by an equally significant 0.76% over the same period.”

Nelson added that although the tax changes may have a slight impact on buy-to-let, investment in property remains a safe bet. As rental incomes and demand for rental properties is still high, it is likely that buy-to-let will remain an attractive investment proposition. Furthermore, Nelson continued to explain that the new pension freedoms may have an impact, as some people will release money specifically to invest in buy-to-let.

As borrowers are now facing tougher affordability checks, tax changes and strict lending rules, it is crucial that they seek professional advice from a CeMAP qualified mortgage adviser before buying a property.