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Buy-to-let mortgage market recovery well underway, latest research shows

The latest industry research and market commentary shows that the buy-to-let sector is showing signs of recovery following the strain of the Covid-19 pandemic.

According to Moneyfacts, the choice in mortgage products has increased, and some higher loan-to-value (LTV) average rates have reduced.

It says these shifts are likely to be linked to lenders’ focus on supporting existing borrowers alleviating and the government guidance on valuation restrictions being lifted.

The analysis shows that there are now 280 buy-to-let mortgage products available when compared with the start of May. Meanwhile, the product choice at 75% LTV has increased by 46 two-year fixed rate deals and 54 more products are available in the five-year fixed rate bracket.

The picture at 80% LTV is similar, with this traditionally smaller sector increasing by 26 two-year fixed rate products and 20 more options available for those seeking a five-year fixed rate over the month.

Moneyfacts says average interest rates on fixed buy-to-let mortgages have risen slightly for two and five-year fixed rates overall, likely due to the increase in the number of products that these averages are based on.

It adds, however, that there is cause for celebration for investors who have only a 20% deposit available, as rates on both two and five-year fixed rate buy-to-let products at 80% LTV have reduced, by 0.49% and 0.67% respectively - great news for those considering purchasing or at remortgaging at this LTV.

"Those looking to invest their money in property now that the mortgage market has reopened may feel [it's] a good time to explore their options, particularly with rates becoming more competitive and product choice beginning to return this month," explains Eleanor Williams, finance expert at Moneyfacts.

"As we begin to see indications that the buy-to-let market may be starting to recover, the full economic impact of the current crisis is still not yet clear for tenants and landlords alike," she says.

"However, those who are in a position to consider capitalising on possible falls in house prices to expand their property portfolios or indeed those looking to switch their current deal, may wish to move quickly."

Williams advises those looking to make a move to seek advice from an independent, qualified financial adviser 'as criteria and requirements continue to be updated'.

In similar news, Paragon Bank has reported a spike in buy-to-let mortgage intermediaries visiting its online portal since the market reopened on May 13.

Visits to the portal, which launched in September 2019, jumped 65% in the two weeks following the market relaunch when compared to the previous two weeks, signalling a strong increase in demand for buy-to-let properties.

Meanwhile, successfully completed applications via the portal rose by 75% over the same period as physical property visits and valuations were allowed again.

"The data suggests that there was plenty of pent up demand in the market caused by the lockdown and that landlords can see new opportunities to buy," comments Moray Hulme, Paragon Bank's mortgage sales director.

"Demand for private rented property remains strong and we expect it to strengthen further as potential homebuyers wait to see how the next few months pan out and rent instead."

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