Five-Year Fixed Buy to Let Rates at Lowest Point

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Five-year fixed buy to let rates have plummeted to a record low of 3.4 per cent, according to the latest data released by Moneyfacts.

Five-year fixed buy to let rates have declined from 3.55 per cent in April, with fierce competition in the sector as well as a tumultuous market stimulating the swift drop.

Finance expert at Moneyfacts, Charlotte Nelson, said: “The buy to let market has been on a rollercoaster ride in recent years, with not only two base rate rises to contend with, but multiple regulation and tax changes thrown into the mix. With all these elements, many would have assumed that rates would rise as a result. However, the opposite appears to be the case, particularly for the long-term fixed rates, with the average five-year fixed mortgage rate falling by 0.05 per cent in just one month to reach the lowest on record.’

Landlords have faced a turbulent market, and many are seeking a break. The number of buy to let property purchases were down 11.1 per cent year on year in July 2018. Providers are therefore aiming to encourage borrowers by revitalising their deals and absorbing some of the costs themselves in order to keep prices down for potential customers.

Nelson continued: ‘Competition in the buy to let market remains high. In the aftermath of August’s base rate rise, many buy to let borrowers will be looking to remortgage from their standard variable rates, with several of these landlords potentially considering longer-term options to act as a buffer against any future rises. It is this extra business that providers are wanting to attract. Not only would a five-year fixed mortgage protect landlords from future rate rises, but savvy borrowers are aware that the strict stress test applied to two-year deals is not applied to five-year fixed rates. This could be yet another reason why competition is now homed in on the five-year fixed rate mortgage market.’