Cheaper Landlord Mortgages But Fewer Borrowers in 2025

Buy to let borrowers can look forward to more affordable loans in 2025 as interest rates continue to fall, according to expert analysts.

But despite cheaper loans, lending to buy new rental properties is expected to drop.

That’s the prediction of number-crunchers at UK Finance, the trade body for Britain’s mortgage lenders and other financial businesses.

The body’s mortgage market forecast for 2025 states: “With rate and cost pressures continuing to ease, the outlook for 2025 is for a gradual improvement in mortgage affordability, which will feed into market growth.

“As interest rates tick down, we expect arrears to continue to fall, with tailored forbearance helping those who need it.”

Downward trend

Total new borrowing for buy-to-let is expected to total £9 billion, a seven per cent drop from the £10 billion lent in 2024, which was a 13 per cent boost from 2023.

James Tatch, Head of Analytics at UK Finance, said: “The mortgage market showed greater than expected resilience in 2024 as cost and rate pressures began to recede. Affordability constraints did impact external remortgage activity. However, strong competition to retain customers meant those coming off fixed rates could find a new internal product transfer deal without needing a new affordability test.

“In 2025 we are forecasting continued steady growth in both house purchase and remortgage lending as affordability improves further. We are however forecasting a slight fall in buy-to-let lending in 2025.”

Meanwhile, the year has started with a new buy-to-et lender entering the market.

ModaMortgages, a Chetwood Bank subsidiary, works exclusively with mortgage brokers and offers deals for corporate, small and portfolio landlords. Mortgages will be considered for buy-to-let, houses in multiple occupation (HMO) and multi-unit blocks of flats.

New landlord lender

Initial lending includes two and five-year fixed buy-to-let mortgages with rates from 3.74 per cent up to 75 per cent of the property’s value with a 2.5 per cent or 5.5 per cent fee.

The rate compares favourably with the best buy two-year fixes listed by independent financial firm Moneyfacts.

Nationwide Building Society subsidiary The Mortgage Works (TMW) has a 3.38 per cent product at up to 65 per cent loan-to-value with a £145 admin charge on application and a 3 per cent arrangement fee on completion.

TMW also offers a 3.58 per cent fix up to 75 per cent LTV with the same £145 admin charge on application and a 3 per cent arrangement fee on completion.

Best buy landlord mortgages

MOLO Finance competes with a 3.63 per cent loan up to 65 per cent LTV with a £150 booking fee and a £100 application fee. The arrangement fee is 6.5 per cent of the advance.

Borrowers must scroll fifty places down the best buy list before another buy-to-let lender emerges - Capital Home Loans (CHL).

CHL's top deal is a 2.97 per cent two-year fix at up to 65 per cent LTV with a £90 admin fee, £150 booking fee and a 7 per cent arrangement fee.