The buy-to-let sector has seen fixed rates fall and product choice grow month-on-month, according to the latest analysis by Moneyfactscompare.

Overall buy-to-let product availability (fixed and variable) has improved month-on-month by just over 100 deals. 

There are now over 2,500 options available, which is an encouraging sign of recovery. A year ago, there were less than 1,000 options.

Average fixed rates have fallen month-on-month, both over a two-year or five-year fixed term. Landlords coming off a five- or two-year fixed rate deal and looking to remortgage will find the latest average rates are around three per cent higher.

Rachel Springall, Finance Expert at Moneyfactscompare, says: “The buy-to-let market has seen a healthy growth in product choice month-on-month and fixed rates have fallen over the same period. 

“These are encouraging signs for landlords looking to refinance who may have been concerned about rates escalating. However, those coming off a two- or five-year fixed rate deal will need to find more funds to afford higher mortgage repayments. 

“The average buy-to-let rate on a two-year fixed mortgage in October 2021 was 2.92 per cent it has now more than doubled to 6.40 per cent while the average rate on a five-year equivalent in October 2018 was 3.40 per cent and now stands at 6.32 per cent.

“Borrowers with just a 20 per cent deposit or equity will find average rates across two- and five-year fixed terms have dropped below seven per cent this month and choice in this niche area of the market has grown. 

“Landlords who have a larger deposit or equity of 25 per cent and are prepared to lock into a five-year fixed mortgage, will find the average rate at 75 per cent loan-to-value stands at its lowest point since June 2023. Product choice for a five-year fixed deal at 75 per cent LTV stands at its highest point on record, with over 600 deals to choose from.

“Despite such positivity, some landlords may seriously be considering selling up, as the profitability of a buy-to-let portfolio may not be enough to cover costs. 

“Over the years, landlords’ profit margins have been hit by a cull in mortgage rate tax relief, tax changes for CGT and holiday lets, plus new EPC requirements. 

“The enticement to invest for new landlords is prevalent, as rental growth on a newly let property hit 12 per cent across Great Britain, according to a study by Hamptons, which also cited the long-term decline in rental stock will continue to underpin future rental growth. 

“The months ahead for the buy-to-let sector are crucial, so any investor would be wise to seek advice before they commit and be conscious of any rental expectations amid rising costs.“