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Buy To Let

Buy-to-let rates fall further

Joanna Faith
Written By:
Joanna Faith

Despite looming changes to Stamp Duty for buy-to-let landlords, the cost of borrowing continues to come down.

The buy-to-let market appears unfazed by Stamp Duty changes, according to analysis of mortgage rates for landlords by financial information provider Moneyfacts.

It revealed that buy-to-let mortgage rates are continuing to drop despite Government proposals to hike Stamp Duty by three percentage points for landlords and other second property buyers. A Treasury consultation on the proposals closed yesterday and the final rules are expected in March.

The average two-year fixed buy-to-let mortgage rate has fallen from 4.92% in 2012 to 3.25% today. And five-year fixes for landlords have dropped from 5.57% in 2012 to a current rate of 4.09%

There has been an enormous increase in the number of buy-to-let products available over the same time period, which have rocketed from 486 to 1,292.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “Potential landlords are clearly conscious of the upcoming increase in Stamp Duty on second properties, which is due to come into play in April. It has sharpened the minds of investors, and as a result, many are looking to buy before the changes are implemented. This extra demand means that providers are competing heavily to attract landlords’ custom, leading to some of the lowest deals on record. For example, the average two-year fixed rate buy-to-let mortgage has fallen by 0.85% in just two years while the number of products offered to borrowers has more than doubled.

“Rates may be falling now, but as the implementation date of the higher Stamp Duty fees approaches, it’s likely that some potential landlords will be deterred. It will therefore be interesting to see what changes occur to the overall BTL market after the charges are increased in April.”