The number of buy-to-let (BTL) mortgages in the market has increased since May, but the level of products is still at two-thirds of what was available at the start of the year, according to Moneyfacts.
The data provider found that the number of BTL mortgages available reached 1,738 at the start of the month, up 283 from 1,455 in May.
Although choice of products has improved, the data showed the overall market was “still far below” the levels seen in January (2,583 BTL products) and March (2,897 products).
The number of BTL products available had been falling month-on-month, from 2,897 in March to 1,887 in April and 1,455 in May.
Product choice within the 80 per cent loan-to-value bracket has improved, as the number of two- and five-year fixed-rate deals has increased since May by 22 and 13 respectively.
Meanwhile, the number of two- and five-year fixed-rate deals within the 60 per cent LTV bracket has fallen slightly, by four and nine respectively.
Buy-to-let mortgage market analysis
BTL product count - fixed and variable rates
Two-year fixed rates BTL - all LTVs
Two-year fixed rates BTL - 80% LTV
Two-year fixed rates BTL - 60% LTV
Five-year fixed rates BTL - all LTVs
Five-year fixed rates BTL - 80% LTV
Five-year fixed rates BTL - 60% LTV
BTL two-year fixed - all LTVs
BTL two-year fixed - 80% LTV
BTL two-year fixed - 60% LTV
BTL five-year fixed - all LTVs
BTL five-year fixed - 80% LTV
BTL five-year fixed - 60% LTV
Data shown is as at first working day of month, unless otherwise stated. Source: Moneyfacts.co.uk
Eleanor Williams, finance expert at Moneyfacts, said: “The small drop in the number of deals at 60 per cent LTV for two and five-year fixed rate products could be explained by the fact that lenders may have increased any maximum LTV caps that they put in place earlier this year, as the number of products live in the next LTV categories (65 per cent, 70 per cent and 75 per cent) have all increased.
"This is a further indication of an appetite to lend from providers in this sector”.
The analysis from Moneyfacts also showed that average rates remained competitive.
The average rate for two-year fixed-rate mortgages at the start of July was 0.21 percentage points lower than at the start of the year. The average five-year fixed-rate also fell by 0.22 percentage points over the same period.
However Ms Williams said that it was “worth noting that these same rates are respectively 0.10 per cent and 0.03 per cent higher than at the start of May 2020.
“This could be the result of the increase in higher LTV products, which usually charge a higher rate, being introduced back into the market and affecting the averages.”
Ms Williams added: “The increase in overall product choice and the fact that average rates remain competitive when compared to where we began this year may be early indications that this sector is starting to recover.
“Due to continuing economic uncertainty and few low-deposit residential mortgage deals available, there may be increased demand for private rental properties, which those landlords in a position to capitalise on may wish to consider.”
Tony Si, director of The Buy to Let Specialist, said: “It’s a welcome sign of some confidence returning to the buy-to-let market, after the initial uncertainty due to the pandemic. A lot of which was due to the fact that surveyors were unable to carry out their duties due to lockdown restrictions.
“Now that Scotland and Wales have also recently opened their housing market up, I think we will see more products and lenders coming back into the market over the coming months. Hopefully with more rate reductions on the cards as we get back to some normality.”