The latest data from UK Finance shows that in the last quarter of 2024, the average buy-to-let (BTL) interest rate for new mortgage loans taken out was 5.09%, a drop of 0.61% on the previous year. And it seems that falling mortgage interest rates may well be having a positive effect on new investment, with the number of loans for new BTL purchases up by more than 46% in Q4 2024 versus the same period in 2023.
It’s important to bear in mind that through 2022 and 2023 inflation was peaking, and in the summer of 2023 the base rate reached a 15-year high. There was economic and political instability and a cost-of-living crisis, as well as a great deal of uncertainty about rental reforms for England. So low levels of new BTL investment at the end of 2023 wasn’t only to do with mortgage rates, and the resurgence over the past six months has probably also been due to pent-up appetite from landlords.
Nevertheless, the rise in the number of landlords buying and remortgaging (total new loans are up nearly 40% year on year) is surely at least partly because of more attractive interest rates. Fixed-rate mortgages are continuing to increase in popularity, with more than two-thirds of landlords choosing fixed-rate products and the number of these loans up 4.4% on Q4 2023.
Lower rates typically mean lower monthly repayments, and this is reflected in the average rental yield, which was 7% in the last quarter of 2024, up almost a quarter of a percent on the previous year (Source: Moneyfacts).
The latest customer survey across LRG (our umbrella company) showed almost a quarter of landlords were looking to increase their portfolio in 2025.
If you’re thinking about making a new investment, you can find the latest BTL rates available on our website: https://www.mortgagescout.co.uk/mortgage-deals
Of course, choosing the right mortgage isn’t only about the interest rate. You also need to consider things like product fees, early redemption charges and the overall terms of the loan, and our buy to let specialist brokers are here to help ensure you get the most appropriate deal for your circumstances.
If you would like to talk through your options and find out about the very latest available rates, just get in touch with us via online chat, by completing our enquiry form or by calling 0800 144 4744.
