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Average five-year BTL rate hits record low: Moneyfacts

Moneyfacts data shows that the average five-year fix for a buy-to-let property is the lowest on record, at 3.40 per cent.

This compares with a year ago, at 3.43 per cent, and a year before that, in 2016, when the average rate stood at 3.77 per cent.

In recent years the BTL market has been the focus of tightening regulation, subjected to various tax changes, and contended with two base rate rises.

Today’s UK Finance data shows that BTL purchases have fallen by 13 per cent in August on a yearly basis, and in response, says Moneyfacts, providers are absorbing costs in order to attract customers.

“As a result,” says Moneyfacts finance expert Charlotte Nelson, “competition in the BTL market remains high. In the aftermath of August’s base rate rise, many BTL borrowers will be looking to remortgage from their standard variable rates, with several of these landlords potentially considering longer-term options to act as a buffer against any future rises. It is this extra business providers are wanting to attract.”

“Not only would a five-year fixed mortgage protect landlords from future rate rises, but savvy borrowers are aware that the strict stress test applied to two-year deals is not applied to five-year fixed rates. This could be yet another reason why competition is now homed in on the five-year fixed rate mortgage market,” she adds.

Nelson also points out that with further base rate rises likely, the average rate may not be at a record low for much longer.

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