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Categories: buy to let mortgages | covid

Landlords now have access to more mortgage options than at any point, since the beginning of the pandemic.

This, coupled with a positive outlook on the market from intermediaries, points towards a good year for landlords.

200 new products

Whilst the pandemic had a temporary impact on the options available from lenders, there are clear signs that the market is returning to normal.

Landlords now have over 2,700 mortgages to choose from. More than 200 came to market in the last month alone.

With new products launching and lenders becoming more confident, a common trend is for average rates to drop.

The current average rate now sits lower than those recorded in July 2019, which is good news to landlords who are looking to remortgage as they may be able to get a cheaper rate.

There is also hope for those with smaller deposits as the number of products that suit those looking for 80% LTV or more are increasing. 85% LTV has been back in the market for some time, post lockdown, when it was temporarily unavailable.

At the same time, the initial rates that these products are being offered at is edging closer to their pre-pandemic levels.

This is good news for landlords as the increase in products is likely to continue to push initial rates lower as lenders compete to be the best product on the market.

Navigating this long list of products, to find the product that fits a landlords needs, is exactly what brokers such as Commercial Trust are here to do.

Are landlords investing?

During the first lockdown, buy to let borrowing activity came to a halt with much of the rest of the world.

However, given the importance of the property market to the economy, the industry remained open in subsequent lockdowns.

The stamp duty holiday was introduced by the government to stimulate activity, which it successfully did do and the effects can still be seen with the run up to the end date in September.

The general outlook for the rest of the year is one of a slower pace on the residential side, which could be good news for landlords wanting to invest in property.

The rental market looks to be on the rise again, as we discussed earlier this month, with record numbers of new tenants registering.

Broker confidence

New data from lender Paragon shows that over half of mortgage intermediaries expect to see an increase in buy to let business in the remainder of the year.

This is despite the tapering off of the stamp duty holiday and the removal of some Covid-related support.

The proportion of intermediaries with a negative outlook remains consistent to the data recorded at the beginning of year (10%) but is far outweighed by those who either expect a rise in business or for it to continue at a steady rate.

Moray Hulme, Paragon Mortgages director of sales, commented:

“These figures suggest that the strong levels of buy-to-let business witnessed over the last six to nine months wasn’t just as a result of the Stamp Duty stimulus, but down to more fundamental shifts in where and how people want to live.

“We still expect to see business levels moderate as the stamp duty holiday ends but landlords are seeing plenty of opportunities to expand their portfolios to meet excellent levels of tenant demand and changes in the type of property people now want to rent.

“There has certainly been a growth in tenant demand for family homes, for example, and landlords are reacting accordingly.

“Mortgage brokers have experienced a busy 12 months after the initial panic of the coronavirus pandemic.

“They enter the second half of 2021 in a confident, robust mood, which is indicative of the underlying demand for mortgage products.”

With tenant demand strong and the fallout from Covid impacting first-time buyers, it is clear that the PRS remains fundamental and will continue to grow, the further away from the start of the pandemic we get.