Buy-to-let rates fall as tax surcharge looms
02-05-2016
Interest rates on buy-to-let mortgages continue to drop as lenders tempt landlords rushing to beat the stamp duty surcharge deadline.
New figures from Moneyfacts.co.uk show the average two-year fixed-rate now charges 3.25%, down from 3.50% one year ago.
Five-year fixed-rates have fallen to 4.09%, down from 4.39% one year ago.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said the 3% surcharge on stamp duty, which comes into force on 1 April, has sharpened the minds of investors, many of whom are rushing to beat the deadline.
Nelson said: “This extra demand means that providers are competing heavily to attract landlords’ custom, leading to some of the lowest deals on record.
“The average two-year fixed rate buy-to-let mortgage has fallen by 0.85% in just two years while the number of products offered to borrowers has more than doubled.”
Nelson said pension freedom reforms continue to encourage the over-55s to invest their lifetime savings in property. "Those who are fed up with the poor returns in the annuity and savings markets are particularly likely to find this sector appealing.”
Nelson suggested that mortgage rates might edge higher after 1 April if demand from landlords falls after the tax charge is introduced.