21% increase in BTL mortgage products available

The number of buy-to-let mortgages products available on the market in June 2019 was the highest in over ten years at 2,396, according to a new report from Moneyfacts. That represents a 21% increase in the number of available BTL mortgage products in the year to June, compared with the same period in 2018.

The increase in BTL products comes as investors continue to adjust to the raft of new rules and regulations, which a separate report suggests not all BTL buyers are completely aware of or comfortable with.

Most BTL mortgage products since 2007

The latest Moneyfacts BTL product report shows that while the increase in BTL mortgage products is up by over a fifth form a year earlier, the total number remains well below the 3,305 BLT products that were on the market in 2007.

In addition, while there are a growing number of BTL mortgage products for investors to choose from, the average interest rate available is on the rise, at 3.05% in June 2019 from 3.02% in May 2019 and 2.18% in June 2018. However, despite that rise, the average rate remains well below the 6.36% in October 2007.

“The BTL market has experienced a number of regulatory changes during recent years, however, it seems that product competition within this specialised mortgage area is continuing to grow,” Darren Cook, finance expert at Moneyfacts said. “A 21% increase in availability to 2,396 products over the past 12 months indicates that providers are keen to offer potential BTL investors plenty of choice within the sector.”

Other details from the report show that:

  • The most BTL products are available at a maximum LTV of 75%
  • The average 2-year fixed rate at the 75% LTV ratio is 3.05%
  • The average 5-year fixed rate BLT mortgage at 75% LTV is 3.55%

BTL investors not on top of industry changes

While its good to see that lenders appear happier to add new BTL products to the market, a separate survey from Market Financial Solutions suggests that not all investors are completely informed of all the changes that have already occurred, or potential future BTL changes.

Specifically, some 30% of those landlords surveyed said they didn’t completely understand the changes relating to House of Multiple Occupation (HMOs) licensing. Meanwhile, 28% weren’t aware that the UK Government is currently consulting on Section 21 rules.

“The legislation and regulation governing the UK’s rental market is constantly evolving, and this research clearly shows that landlords are struggling to keep pace with the change,” said Market Financial Solutions CEO, Paresh Paja.

Indeed, landlords have endured numerous changes to the BTL industry, including to the tax treatment of mortgage interest and the way stamp duty tax is calculated on investment purchases. Despite these changes over the past few years the sector remains well populated by investors, albeit with slower growth in the number of new BTL landlords joining the market in the wake of the various changes.

With more BTL mortgage products on offer, lets hope the PRS can benefit from that wider choice and continue to grow and provide the homes that are needed across the UK.

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