High LTV buy-to-let rates rising



The cost of 85% loan-to-value buy-to-let mortgages are on the rise, though investors have more products to choose from, analysis from Moneyfacts.co.uk shows.

The cost of 2-year fixed rates to 85% LTV averaged at 5.42% in January 2022, up from 5.17%, while 85% LTV 5-year fixed rates are typically priced at 5.52%, rising from 5.22%.

However the 85% LTV product count has risen from 10 in December 2021 to 28 in January 2022.

The markets expect the Bank of England to increase the base rate from 0.25% to 0.50% in February.

However this is barely reflected in the cost of most buy-to-let products.

Indeed, 5-year fixes to 65% LTV and 75% LTV have gotten cheaper month-on-month, with the former falling from 3.06% in December to 3.00% in January.

Landlords have more products to choose from generally, as 222 more were added in January, bringing the total up to 3,528.

Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “The latest Rental Market Report from Zoopla indicates that rental demand grew to a 13-year high in the third quarter of 2021, and while demand for property continues to outstrip supply, it also recorded an increase in average UK rents of 4.6% over the year, so there may be those considering investing in the sector.

“Our latest data suggests that providers seem prepared to offer a variety of deals for landlords who are either investing in property or are looking to lock into a new deal, so anyone considering their next move in the BTL arena would be wise to seek advice from an independent broker to assess the changing market.”

Those who took out a 75% LTV five-year fixed rate in 2017 and are looking for an equivalent deal now will find that, at 3.19%, the average rate is 0.70% lower now than when they secured their previous deal.

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