Buy-to-let boom sees number of mortgage deals rise to seven-year high

Posted 1 September 2015 by Nick Parkhouse

If you're looking for a buy-to-let mortgage then new data shows that you have the best choice of products since the financial crisis.

The number of landlord mortgage deals has risen over 1,000 for the first time since April 2008, more than double the amount just two years ago. As the choice of deals has risen the cost of buy-to-let mortgages has also fallen.

Over 1,000 buy-to-let mortgage deals now available

New data from the financial analysts Moneyfacts has revealed that the choice of buy-to-let mortgages has exceeded 1,000 for the first time since spring 2008. There are now 1,011 buy-to-let mortgage deals available, more than double the 460 on the market in 2013.

And, as well as a greater choice of deals, the cost of buy-to-let mortgages has also fallen substantially in recent years. This Is Money reports that the typical buy-to-let variable mortgage rate is currently 3.6% compared to 6.84% in August 2008. The average buy-to-let fixed rate has almost halved in the same period, from 7.34% seven years ago to 3.8% now.

The 'best-buy' deals for landlords are now so low that they can take a two-year fixed-rate deal at just over 2%.

Keith Osborne, editor of new homes portal, believes that changes to pension rules are driving the demand for buy-to-let property: “With pensioners now able to access their pensions as a lump sum rather than having to buy an annuity to guarantee an income for life, the demand for alternative investments such as property has increased.

"Indeed, the Chancellor told the House of Commons in June that around 60,000 people had taken around £1bn out of pension pots already. With pensioners able to take out 25% of their funds as a lump sum many are considering using this as a deposit and using a buy-to-let mortgage to fund the rest of the purchase price.”

Charlotte Nelson, finance expert at Moneyfacts, remarks: "With high rents and poor savings rates, it's little wonder that the buy-to-let market is booming, with the number of deals hitting the 1,000 mark for the first time in over seven years. The boom in deals has undoubtedly been boosted by providers taking advantage of the new demand from thousands of pensioners making the most of the new pension freedoms.”

Recent reports have suggested that property could continue to be a lucrative investment with economists at accountancy firm PwC predicting that by 2025 more than half of those under 40 will be living in properties owned by private landlords.

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