Brexit fears result in Buy-to-let mortgage rates dropping

Lenders have slashed their buy-to-let mortgage rates and increased the amount they are willing to lend as a result of the Brexit result.

Many of the biggest lenders have dropped their rates in an attempt to draw in new borrowers who may be looking to remortgage or purchase new properties.

Following the rise in stamp duty in April the buy-to-let market is slightly quieter than it was and many also believe that Brexit has had its part to play and so lenders are doing all they can to make things work for landlords. Landlord tax has been cut, which will come into effect next year, there is also the stamp duty rise as well as the uncertainty surrounding the market, all of which is making investors slightly nervous.

Some of the best rates available at the moment offer a two year discounted rate at 4.995 with 85% LTV available and there are others available that come with a lower rate but there is an arrangement fee to be paid. These rates do depend on whether you have used a lender directly or have opted to use a mortgage adviser.

First time landlords are slightly more restricted because of new rules that have been put in place from Europe that came into play in March and this was done to improve customer protection rights. Therefore, many lenders ceased lending to first time landlords or it forced them to ask questions in order to gain further information regarding their income and expenditures.

Rates are dropping but investors are having to jump through hoops to get them and lenders are looking for increased rental cover. This means that it is wise to seek advice so that you can find the best deal.

Lenders are struggling to increase business following the 3% surcharge on all buy-to-let properties for sale. This lead to many investors purchasing before the surcharge came into effect and this meant that the market slowed down after it.

The Council of Mortgage Lenders has released figures that show that the number of mortgages taken out for purchase in April was 4,200 whereas that figure was 28,700 just a month earlier. It is unlikely that investors are going to increase their activity through the remainder of 2016.

However, the future is unknown when it comes to rates but the buy-to-let market is relatively strong with the possibility that the numbers could increase to what they were before the changes came about.

It is crucial that landlords understand the ins and outs of any deal they take on as they have to be sure that they can make a profit. There are product fees to pay for many deals, some of which have to be paid upfront and all other costs should be taken into consideration before an agreement is put in place.

For those who are considering a remortgage, there is still the problem of higher rates of stamp duty as well as the loss of tax relied on mortgage payments and expenses. Next year brings with it the introduction of Prudential Regulation Authority Rules and this will mean that lenders are more restrictive with their lending. Essentially this will mean that lenders will not offer as much as they once did and this means that landlords need to speak with their advisers and brokers to ensure that they are finding the right deals offered by those specialist lenders.

Mark Burns

Mark Burns is a Director and Property Investment Consultant at Hopwood House. With over 10 years' experience in property investment, Mark has provided investors with a wide range of opportunities in exotic locations around the world.

You May Also Enjoy

Breaking News

Rental price and average salary tracker – September 2025

London and South East see biggest dips in required rental salary year-on-year London and the South East saw the sharpest dips year-on-year in the average salary needed in order to rent the average home in that area. London saw a 4.2% drop, whilst the South East saw a decline of 2.9%. Yorkshire and Humberside saw…
Read More
buying at auction uk
Breaking News

The cities where buying beats renting – with just a 5% deposit

British first-time buyer mortgage payments are typically 17% cheaper than renting, even with a low 5% deposit The average 5% deposit is £11,412 based on a typical first-time buyer property price of £228,233 Among major cities outside London, the biggest gap between owning and renting is in Glasgow, where buyers could save more than £4,750…
Read More
Rightmove logo
Breaking News

Rightmove’s Weekly Mortgage Rates Tracker

Average rates for 2-year and 5-year fixed-rate mortgages   Term Average rate Weekly change Yearly change 2-year fixed 4.51% +0.00% -0.37% 5-year fixed 4.55% +0.01% +0.01%   Lowest rates for 2-year and 5-year fixed-rate mortgages   Term Lowest rate Weekly change Yearly change 2-year fixed 3.77% +0.05% -0.07% 5-year fixed 3.97% +0.10% +0.29%   Average…
Read More
Rightmove logo
Breaking News

Data and commentary from Rightmove on stamp duty reforms

Colleen Babcock, Rightmove’s property expert said: “We’ve been calling for stamp duty reform for some time now, as it’s a significant barrier for many people moving home. Abolishing it completely would remove one of the biggest barriers to moving, unlocking more moves at all stages of the property ladder. “Our data shows that only 5%…
Read More
Breaking News

Second-time buyers dominate demand for longer term fixed mortgage deals

Second-time buyers are dominating demand for longer term fixed mortgage deals, fresh data from Moneyfacts Analyser can reveal. Of those looking for fixed term deals on moneyfactscompare.co.uk: Almost two-thirds (58%) of second-time buyers who compared mortgage deals using the moneyfactscompare.co.uk website were considering terms of three years or longer in the 30 days to 1…
Read More
Breaking News

59% Increase in First Time Buyers in Summer 2025

The summer of 2025 saw a 59% increase in first-time buyers getting on the property ladder compared to the same period in 2024, according to a report by Compare My Move who surveyed users purchasing a house with a conveyancing solicitor.       Average Percentage of First-Time Buyers  Year  Entire Year  Summer Months  2024  66% …
Read More