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The number of buy-to-let mortgages on the market is at its highest level since October 2007 but rates have also increased, data from Moneyfacts.co.uk has revealed.

According to statistics released today, there are currently 2,396 buy-to-let products on the market, a figure which as soared in the past month alone by 143.

It comes despite regulatory changes, which have dampened enthusiasm from many would-be buy-to-let investors and disheartened those already in the market.

It is also the highest level of product availability since before the financial crisis, when the total number of products stood at 3,305.

Average rates

Yet, despite this rise in numbers and competition within the market, rates have not fallen. In fact, according to Moneyfacts’ data, over the past 12 months the average two-year buy-to-let fixed-rate mortgage has increased by 0.17% from 2.88% in June 2018 to 3.05% this month.

The average five-year buy-to-let fixed rate, meanwhile, has increased by 0.11% and now stands at 3.54% compared to 3.43%, which was the typical rate in June last year.

Although the rates are going upwards, they are still nowhere near the average of 6.36% for a two-year fixed rate and 6.39% for the five year version that the buy-to-let market experienced in October 2017.

Choice for investors

Moneyfacts said the fact the availability of products had increased by 21% in the past year indicated providers were keen to offer buy-to-let investors plenty of choice within the sector.

Darren Cook, finance expert at Moneyfacts, said: “The buy-to-let market has experienced a number of regulatory changes of recent years, however it seems product competition within this specialised mortgage area is continuing to grow.”

Cook said the largest concentration of product choice was at the maximum 75% loan-to-value (LTV) tier, where there were 352 two-year fixed-rate products – which is 44% of the market – and 374 five-year mortgages, which is 48% of this market.

The average fixed rates at the 75% LTV tier, for both the two and five year sectors, were at 3.05% and 3.55% respectively, according to Moneyfacts. These rates equalled, or nearly equalled, the average rates for both terms across all tiers.

Cook added: “The increase in the BTL average rates contrasts with the downward trajectory of their residential mortgage counterparts, where product competition seems to have instead resulted in rates falling.

“This disparity in trends is likely to be attributed to the different approach lenders take to risk between these two sectors, and that economic uncertainty may be having a more adverse influence on the BTL mortgage market than it is having on the residential mortgage market.”

(Source: Moneyfacts Treasury Reports)  

All available BTL products Two-year fixed rate BTL mortgage Five-year fixed rate BTL mortgage
  Product numbers Product numbers Average rate Product numbers Average rate
Oct-07 3,305 409 6.36% 181 6.39%
Jun-18 1,929 678 2.88% 637 3.43%
May-19 2,253 739 3.02% 730 3.53%
Jun-19 2,396 802 3.05% 785 3.54%

By Kate Saines

Source: Mortgage Finance Gazette

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