The number of buy-to-let mortgages available in June was up 280 on May, in a sign that the buy-to-let market may be starting to recover, according to Moneyfacts.
Figures from the data provider showed as at June 1 there were 1735 buy-to-let mortgage products available, compared with 1455 on May 1.
But average interest rates on buy-to-let mortgages have risen for two- and five-year fixed rates by 0.08 and 0.09 percentage points respectively, possibly because of the rise in the number of products available.
The LTV bracket to buck the trend was the 80 per cent bracket, where average rates reduced by 0.49 percentage points for two-year fixes and 0.67 percentage points for five-year fixes..
Commenting on the increase in product choice, Eleanor Williams, finance expert at Moneyfacts, said: "This is encouraging considering that early in the Covid-19 crisis, providers were focused on supporting existing customers and restrictions meant that physical valuations were not feasible, seeing many lenders reduce their offerings to lower risk, lower LTV products".
Ms Williams added: “As we begin to see indications that the buy-to-let market may be starting to recover, the full economic impact of the current crisis is still not yet clear for tenants and landlords alike.
"However, those who are in a position to consider capitalising on possible falls in house prices to expand their property portfolios or indeed those looking to switch their current deal, may wish to move quickly".
Good start
The year started well for buy-to-let as there was an increase in activity during the first quarter of 2020 spanning the period before and leading up to coronavirus and the associated lockdown.
UK Finance's household finance review, published last week (June 4), found buy-to-let house purchases had increased by a “comparatively large” 7 per cent in Q1 2020, relative to the same period last year.
According to UK Finance, the data “captures some very early signs of the impact on household finance activity, immediately before and after the introduction of lockdown restrictions” on March 23.
However Eric Leenders, managing director of personal finance at UK Finance, said the review did not capture the various support measures to households that the industry had enacted, such as three-month payment holidays and a repossession moratorium.
Under coronavirus measures borrowers who are struggling to make their mortgage repayments because of coronavirus can apply for a payment holiday while lenders are also expected to stop repossession action until October 31.
John Goodall, CEO at buy-to-let lender Landbay, said: “UK Finance shows a 7 per cent year-on-year increase, but what we saw was significantly in excess of that. While the coronavirus lockdown from mid-March has hampered this, there is still a notable demand from landlords and investors”.
But he added: “What these figures don’t show is the effect of payment holidays. While there is demand, borrowers who are trying to take out new mortgages whilst also taking payment holidays on existing parts of their portfolio may find it harder to buy than they did before”.
UK Finance said activity in buy-to-let had helped offset a drop in first time buyer numbers.
Mr Goodall said this drop could be seen in the figures “even before Covid-19 hit", adding "following the pandemic it is highly likely that people will be renting for much longer, so the need for private buy-to-let will be greater than ever”.
Buy-to-let market analysis
PRODUCT NUMBERS | May-20 | Jun-20 | Difference |
BTL product count (fixed and variable) | 1455 | 1735 | 280 |
Two-year fixed rate BTL all LTVs | 491 | 597 | 106 |
Two-year fixed rate BTL at 75% LTV | 165 | 211 | 46 |
Two-year fixed rate BTL at 80% LTV | 9 | 35 | 26 |
Five-year fixed rate BTL all LTVs | 480 | 607 | 127 |
Five-year fixed rate BTL at 75% LTV | 176 | 230 | 54 |
Five-year fixed rate BTL at 80% LTV | 6 | 26 | 20 |
AVERAGE RATES | May-20 | Jun-20 | Difference |
Two-year fixed rate BTL all LTVs | 2.51% | 2.59% | 0.08% |
Two-year fixed rate BTL at 75% LTV | 2.60% | 2.64% | 0.04% |
Two-year fixed rate BTL at 80% LTV | 3.61% | 3.12% | -0.49% |
Five-year fixed rate BTL all LTVs | 2.94% | 3.03% | 0.09% |
Five-year fixed rate BTL at 75% LTV | 3.15% | 3.17% | 0.02% |
Five-year fixed rate BTL at 80% LTV | 4.32% | 3.65% | -0.67% |
Source: Moneyfacts Treasury Reports. Data shown is as at the first of the month unless otherwise stated. | |||
chloe.cheung@ft.com
