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Buy-to-let mortgage interest rates hit all-time low

Jamie Royston
03.11.18

Buy-to-let mortgage interest rates have hit an all-time low, making borrowing to invest in property to let out more attractive than ever.

A raft of recent tax reforms to the sector has led to a decline in buy-to-let purchases in the UK, meaning the market is less competitive than it has been previously.

As the consumer site Which? asks, with buy-to-let mortgage rates falling to an all-time low and less competition among landlords, could now be the time to jump in?

The slowdown of the market has pushed lenders to offer incredibly attractive interest rates on buy-to-let mortgages as a means of enticing investors.

The fall in interest rates on BTL mortgages comes despite two base rate hikes in the last year. According to Moneyfacts the average five-year, fixed-rate BTL mortgage deal now stands at 3.25%, the lowest rate since Moneyfacts started reporting buy-to-let mortgage data. This is down from the rate of 4.38% five years ago.

Even landlords on variable-rate deals are enjoying lower interest rates on their mortgages, which have decreased from 4.28% in 2013 to 3.22% in 2018.

More landlords becoming buy-to-let companies

Within the current buy-to-let climate in Britain, which has seen cuts to mortgage interest tax relief and wear and tear allowance, a growing number of landlords are opting to set up a more formal structure for their property investments in the format of buy-to-let companies.

While mortgage interest rates might be slightly higher for company BTL mortgages, setting up a limited company to conduct property investment business enables landlords to offset mortgage interest against tax costs.

The professionalisation of the buy-to-let market is seeing a rising number of landlords making a full-time living out of their property portfolios. In fact, the first quarter of 2018 saw 78% of applications for BTL mortgages come from limited companies. This compares to 50% two years ago.

If you are thinking about capitalising on record-low interest rates for buy-to-let mortgages or are wanting to increase your portfolio of rental properties, Auction House London’s property auctions could be the perfect place to find your first or next buy-to-let investment.

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