2024 Buy-to-Let Market: Lenders vs. Demand | Guild of Residential Landlords

Buy-to-let lenders are brimming over with cash, but landlords are reluctant to take up the deals.

A comprehensive study of the buy-to-let mortgage market reveals a significant surge in product choice, with a staggering 2,883 loans now on offer from various institutions, including banks, building societies, and specialist lenders.

The average two— and five-year fixed rates increased by 0.1 per cent but remained competitive while staying below six per cent this year.

However, the latest data from buy-to-let lender trade body UK Finance shows that lending of £6.3 billion on new purchases was down 55 per cent in the final quarter of last year compared with the year before.

Fewer loans for less money

All the performance indicators for buy-to-let mortgages dipped significantly in the red.

Loans for new purchases were down 56 per cent to £1.8 billion, the lowest amount since the end of 2019
Remortgage borrowing was down 55 per cent to £4.3 billion, again the lowest figure since 2019
At 11,985, the number of new purchase loans was down 52 per cent
Remortgage deals were double the number of purchases at 23,371 but still down 54 per cent
The decline in lending comes from portfolio landlords, with more than four properties, and small landlords, with three or fewer properties
Corporate landlords also borrowed less - just under £950 million (down 43 per cent)

Despite lenders tussling with each other to offer the best mortgage deals, interest rates averaged 5.7 per cent at the start of the year - compared with 3.67 per cent a year earlier.

How buy-to-let mortgage rates have changed

Average rates	Apr-22	Apr-23	Oct-23	Mar-24	Apr-24
Two-year fixed rate BTL for all LTVs	3.22%	5.64%	6.40%	5.51%	5.52%
Two-year fixed rate BTL at 60% LTV	2.50%	5.27%	6.09%	5.22%	5.21%
Two-year fixed rate BTL at 75% LTV	3.15%	5.63%	6.40%	5.53%	5.56%
Two-year fixed rate BTL at 80% LTV	3.89%	6.43%	6.95%	6.24%	6.22%
Five-year fixed rate BTL for all LTVs	3.42%	5.61%	6.32%	5.51%	5.52%
Five-year fixed rate BTL at 60% LTV	2.70%	5.07%	5.70%	4.84%	4.81%
Five-year fixed rate BTL at 75% LTV	3.37%	5.67%	6.36%	5.53%	5.54%
Five-year fixed rate BTL at 80% LTV	4.04%	6.54%	6.84%	6.18%	6.19%

Source: Moneyfacts

Mortgage analysts Moneyfacts warns landlords that investing in buy-to-let is becoming more challenging as the rising cost of living and tax changes set by Chancellor Jeremy Hunt are shrinking profits.

“Landlords looking to sell up this year may note house prices have fallen, plus landlords who sell will see a higher capital gains tax bill than in previous tax years, which could dampen the overall return on their original investment,” said the firm’s Rachel Springall.
“Landlords with a limited deposit will find a growing pool of products at 80 per cent loan-to-value, with deals over two- and five-year fixed rising month-on-month. This improvement is welcome, but the real challenge surrounds affordability, where the average two- and five-year fixed rates at 80 per cent loan-to-value remain above 6 per cent. However, looking at the overall average rates, both have remained below 6 per cent throughout 2024.”