Easing mortgage rates are encouraging landlords to expand their portfolios, with the final three months of last year seeing a huge 39% increase in the number of Buy to Let mortgages taken out.
According to UK Finance’s latest quarterly insight, there were 52,648 new Buy to Let mortgages advanced between September and December last year, worth £9.6 billion, up 39.2% compared with the same period a year earlier.
Average Buy to Let rates have fallen in recent months, according to UK Finance, with the average interest rate across easing to 5.09% in the final three months of 2024. This was 0.13%lower than in the previous quarter, and 0.61%less than in the same quarter of 2023.
Landlords are also benefiting from rising rental yields, with the average gross rental yield for the UK reaching 7% at the end of last year, compared with 6.74% in the same three months of the previous year.
Tenant demand for rental properties remains strong, with separate analysis from Pegasus Insights, carried out on behalf of the National Residential Landlords Association (NRLA) showing that almost 8 in 10 landlords (77 per cent) across England and Wales reported strong demand from prospective tenants in the final quarter of 2024.
Landlords have been hard hit in recent years by a series of tax and regulatory charges, including sharp increases to stamp duty on second homes, so more competitive Buy to Let mortgage rates are welcome news.
Landlords who haven’t remortgaged recently should review their current rate and see if they might be able to reduce costs by switching to a new deal. Locking into a low-cost fixed rate, for example, could not only help reduce monthly mortgage outgoings, but may also provide valuable budgeting certainty in the months to come.
