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Headline buy-to-let mortgage rates suggest the cost of borrowing is plunging for landlords, but experts warn higher rates are coming.
Despite concerns about the impact of the Renters’ Rights Bill going through Parliament, property investors seem keen to take on more finance to streamline or expand their portfolios.
Lenders like buy-to-let specialist Paragon are reporting booming profits, while rates are falling due to the Bank of England's cuts.
UK Finance, the trade body for mortgage lenders, reports that 51,459 new buy-to-let mortgages worth £8.9 billion were taken out in Q2 2024, a 26 percent increase from the same period a year earlier.
And this is expected to rise when Q3 data is released in January 2025.
The average Q2 2024 interest rate was 5.19 percent, considerably higher than the headline rates posted by many lenders in the final weeks of this year.
“This was 21 basis points lower than in the previous quarter, but 0.04 basis points higher than in the same quarter of 2023,” said a UK Finance spokesman.
Financial comparison site Moneyfacts publishes a regularly updated list of buy-to-let mortgage best buys with details of over 800 deals from a broad range of lenders. Here are some of the top deals:
Lender | Type | Rate | APRC | Period | LTV | Fees |
The Mortgage Works | Fixed | 3.39% | 8.20% | 31,01,2027 | 65% | 3% arrangement fee + £145 admin fee |
The Mortgage Works | Fixed | 3.59% | 8.70% | 31,01,2027 | 75% | 3% arrangement fee + £145 admin fee |
Molo Finance | Fixed | 3.63% | 7.70% | 24 months | 65% | 6.5% arrangement fee + £150 booking fee + £100 admin fee |
The Mortgage Works | Fixed | 4.09% | 8.70% | 31,01,2027 | 75% | 3% arrangement fee + £145 admin fee |
The Mortgage Works | Fixed | 4.24% | 8.30% | 31,01,2027 | 65% | £3,995 arrangement fee + £145 admin fee |
The Mortgage Works | Fixed | 4.34% | 8.30% | 31,01,2027 | 65% | £3,995 arrangement fee + £145 admin fee |
The Mortgage Works | Fixed | 4.39% | 8.70% | 31,01,2027 | 75% | £3,995 arrangement fee + £145 admin fee |
CHL Mortgages | Fixed | 2.97% | 9.20% | 24 months | 65% | 7% arrangement fee + £150 booking fee + £90 admin fee |
CHL Mortgages | Fixed | 3.07% | 9.20% | 24 months | 70% | 7% arrangement fee + £150 booking fee + £90 admin fee |
Zephyr Homeloans | Fixed | 3.19% | 9.60% | 24 months | 65% | 7% arrangement fee + £150 booking fee + £55 vacating fee |
Source: Moneyfacts
Although current mortgage rates look attractive, the Bank of England is warning that half of borrowers will likely pay more for their loans over the next three years.
The BoE estimates that up to 1.5 million borrowers can expect a second rate increase, having already fixed their mortgages at higher prices since interest rates rose in the second half of 2021. A third of borrowers are predicted to refinance at rates higher than 3 percent for the first time before the end of 2027.