BTL Mortgage Rates Stay Higher for Longer

Buy-to-let mortgage lenders are cautious about lending in the new regulatory environment set out by the Renters' Rights Act, which became law only a month ago, on 1 May 2026.

Landlords can’t expect any great movement in interest rates until the market has settled.

Here is a breakdown of the headline news and trends shaping the buy-to-let market in June 2026.

Rate adjustments and new product launches

Following a volatile period for swap rates, which dictate lenders' funding costs amid global geopolitical tensions, several major lenders are restructuring to remain competitive.

• The Mortgage Works (TMW) has introduced new two-year tracker options starting at 4.19 percent (up to 65 percent LTV with a 1 percent fee). Rates are slashed by up to 0.15 percent.
• Shawbrook & The Mortgage Lender (TML): Launched a limited-edition five-year fixed-rate product starting from 4.74 percent. TML trimmed rates by up to 15bps across fixed-rate loans, bringing five-year HMO rates down to 5.06 percent.
• Coventry for Intermediaries: Cut rates up to 10bps across buy-to-let offering.

While fixed rates are dipping slightly as lenders compete for business, market experts warn that swap rates remain elevated. This means the downward trend could plateau or even subtly reverse later in the year, making it a crucial time to lock in rates early.

Market health and affordability

Data from UK Finance and industry indices highlight how the BTL market is adjusting to the "higher-for-longer" rate environment:

• Affordability Stress: Average Interest Cover Ratios (ICRs)—the metric lenders use to see how comfortably a property's rental income covers its mortgage debt—have compressed significantly over the last few years.
• The Rise of Limited Companies: Because of the restriction on personal mortgage interest tax relief for higher-rate taxpayers, a massive chunk of new BTL lending is being funnelled through limited company structures rather than individual names.
• Arrears Stay Low: Despite the squeeze on landlord profit margins, overall BTL mortgage arrears remain remarkably resilient, hovering under 0.7 percent of all active loans.

Best buy mortgage rates

An example mortgage is borrowing £170,000 over 25 years on a house valued at £284,000 at an interest rate of 4.09 percent variable for 25 months, reverting to 8.19 percent variable for the term. 25 monthly payments of £579.42 and 275 monthly payments of £1160.25. Total payable £509,129.25, including loan amount, interest of £333,554, a £300 valuation fee and product fees of £500. The overall cost for comparison is 8.1 percent APRC representative.

Source: Moneyfacts