2024 Buy-to-Let Market: Mortgage Growth & Rate Trends
New buy-to-let mortgage data shows private renting is still alive despite much bemoaning by landlords.
Property investors took out 51,459 new mortgages in the second quarter of this year - a 26 per cent increase on Q2 2023, according to the latest statistics from mortgage lender trade body UK Finance.
Q2 2024 borrowing was also up 27 per cent to £8.9 billion compared with the same period a year ago.
UK Finance says fewer than half of the country's buy-to-let homes are mortgaged. Data shows that 1.4 million homes are tied to fixed-rate loans, and 565,815 are on a variable rate.
The average interest rate across Q2's buy-to-let loans was 5.19 per cent, 21 basis points lower than Q1 2024 but 0.04 basis points higher than in the same quarter of 2023. Mortgage rates are high, but they have sunk to their lowest since September 2022, after peaking at 6.29 per cent in August 2023.
Landlords remortgaging at the end of a two- or five-year fix will likely increase their payments.
Buy-to-let mortgage rates are falling in line with inflation, and as the cost of living continues to drop, mortgage rates should also get cheaper.
Best buy-to-let mortgage rates
| Type | Rate | LTV | Lender |
|---|---|---|---|
| 2 year fixed | 2.83% | 65% | The Mortgage Works |
| 3 year fixed | 4.84% | 90% | Accord Mortgages |
| 5 year fixed | 3.68% | 65% | The Mortgage Works |
| 10 year fixed | 5.99% | 75% | Virgin Money |
| 60% LTV | 2.83% | 65% | The Mortgage Works |
| 75% LTV | 3.29% | 75% | Molo |
| 80% LTV | 3.44% | 80% | Molo |
| Discounted variable | 4.90% | 75% | Monmouthshire Building Society |
| All variable | 4.90% | 75% | The Mortgage Works |
Buy-to-let mortgage arrears up 50 per cent
The average buy-to-let interest cover ratio (ICR) in Q2 2024 was 196 per cent, up from 190 per cent in Q1 2024 and equal to the 196 per cent posted a year ago. The ICR is an affordability test that shows mortgage repayments cover at least 125 per cent of the amount due to the lender each month.
By the end of Q2 2024, 13,570 buy-to-let mortgages were in severe arrears--greater than 2.5 per cent of the outstanding balance. This was up 51 per cent from the same quarter last year.
The average gross buy-to-let rental yield in Q2 2024 was 6.9 percent, compared with 6.51 percent in the same quarter last year.
Some 710 buy-to-let homes were repossessed in Q2 2024, up 33.8 per cent on Q2 2023.
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