"80% is currently the highest LTV available to landlords since the handful of 85% LTV deals that had come back to market were withdrawn in mid-October."
However, analysis from Moneyfacts shows that buy-to-let product choice has dropped slightly since recovering to 1,825 in October, reducing by 33 to 1,792 today. In comparison to this time last year, there are 819 fewer deals available to potential borrowers.
The average two-year fixed rate for all LTV brackets is 2.90%, 0.13% higher than in March prior to the start of the coronavirus pandemic, but 0.06% lower when compared to November 2019. The equivalent average five-year fixed rate at 3.26% also sits 0.02% higher than in March but is still 0.14% lower than last November.
Those looking at borrowing at either end of the LTV tiers may be disappointed to see that at 60% LTV, the average two-year fixed rate is now 2.56% and the equivalent five-year rate is now 2.86%, 0.67% and 0.55% above where they were in March, while at 80% LTV the equivalent rates have increased by 0.60% and 0.36% respectively over the same time period, and now sit at 4.16% and 4.34%.
Eleanor Williams, finance expert at Moneyfacts, said: “After dropping to 1,455 products available to landlords in May, the earlier resilience and increase in product choice in the buy-to-let market seems to have taken a small hit recently, with product numbers now lower than the 1,825 our records show as on offer in October. With 1,792 deals now available, we have however seen an increase of 20 products come to market since the start of November, but current totals still represent a 38% contraction in the market when compared to March, before the onset of the pandemic.
“According to our data, 80% is currently the highest LTV available to landlords since the handful of 85% LTV deals that had come back to market were withdrawn in mid-October. It may therefore be disappointing to see that the choice of products in the 80% LTV tier has shrunk by 25 deals since the start of November, with 74 now on offer and resulting in less choice for those landlords with lower levels of equity or deposit.
“In the 60% LTV bracket, although there are 100 fewer products available now than there were in July, prospective borrowers with 40% deposit or equity may wish to note that five additional products have been launched since the beginning of November. It may possibly be the case that as some lenders have increased the maximum LTV tiers they will lend in, that the inflated number of 60% LTV products has reduced, as we see that product availability has increased by 52 in the 75% LTV tier since October, with 32 of those deals becoming available since the start of November.
“Perhaps equally disappointing to those looking to explore their BTL mortgage options now will be the fact that average rates have continued to increase. The overall average two-year fixed BTL rate at all LTVs has increased for six consecutive months, and at 2.90% is 0.01% higher than at the start of November, and 0.13% higher than in March. The equivalent five-year average rate has increased over the last four months, but at 3.26%, this has seen a small reduction of 0.02% since the start of November. However, both rates are now higher than the same rates were in March, which was before the onset of the pandemic and prior to base rate being cut twice.
“The trend of rates increasing is echoed across the LTV spectrum. Seeing increases of 0.60% and 0.67% respectively, the two-year average fixed rates at 80% and 60% LTV demonstrate the steepest increases over the same time period, while those looking to secure the longer-term stability of a five-year fixed deal will find that the equivalent fixed rates in these LTV brackets have increased by 0.36% and 0.55%. Those with 25% deposit or equity might be pleased to note that at 75% LTV the increases have been less severe, with the two-year average fixed rate rising by 0.18% and the five-year equivalent going up by just 0.05%.
“Landlords who are considering investing or refinancing their BTL properties may wish to explore their options soon – both in order to capitalise on the possible savings available via the stamp duty holiday before this expires at the end of March 2021, but also before rates potentially increase even further."
