Moneyfacts has revealed that the number of buy-to-let deals has hit 1,000 for the first time since April 2008.
There were 1,128 buy-to-let deals available in April 2008, which plummeted to 476 by August 2008. By August 2013 there were 460, in August 2014 there were 681 and today there are 1,011 loans available.
The average buy-to-let variable rate mortgage was 6.66 per cent back in April 2008 whereas today it stands at 3.6 per cent. The average buy-to-let fixed rate mortgage was 6.48 per cent in April 2008 and today it is 3.8 per cent.
Charlotte Nelson, finance expert at Moneyfacts, was not surprised by the data, with interest in buy-to-let being driven by “high rents and poor savings rates”, as well as the new pension freedoms.
She said: “Unsurprisingly, the growth in products has been accompanied by falling average rates, which have dropped by around 3 per cent over the same period. This can help many borrowers to make easy savings, which means that they can generate even bigger returns on their investment.
“However, with a base rate rise on the horizon these low rates won’t last forever, so borrowers need to act fast to secure a low rate.
“Future legislative changes to the buy-to-let market also mean that potential investors need to keep an eye on any announcements to ensure that buy-to-let will still be profitable.
“More deals on the market mean that it’s more important than ever to shop around and weigh up the true cost of a mortgage to ensure that the best deal is secured.”
The surge in deals come after the chancellor’s summer Budget saw tax relief on mortgage interest for buy-to-let investors reduced.
Simon Whittaker, finance director at Mortgages for Business, told sister magazine Money Management that the changes will be a blow to many but they will encourage investors to restructure their portfolios more tax efficiently.
For example, he suggested that the tax change has shifted the market in favour of the buy-to-let investment being held in a limited company structure as the new restriction applies to individual investors, not to limited companies.
emma.hughes@ft.com
