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Buy-to-let mortgage rates are dropping in May 2026 despite a backdrop of economic gloom, rising prices, and uncertainty over oil and gas prices.
Lenders may be chipping away at costs to bring down the cost of borrowing, but the trend may be short-lived as interest rates yo-yo, according to the latest pronouncement from US President Donald Trump or nameless political leaders in Iran.
Financial expert Rachel Springer, of MoneyfactsCompare, explained that some big banks have cut interest rates to compete for new business. This list of lenders includes HSBC, which is leading the pack by offering several keen fixed-rate deals.
"The markets need more stability, so the longer unrest goes on in the Middle East, the longer borrowers and lenders are in limbo," she said.
"If inflation continues to rise, this could fuel the Bank of England to hike the base interest rate, which will lead to higher borrowing costs."
The buy-to-let mortgage market is swollen with deals. MoneyfactsCompare lists more than 5,000 loans for landlords, but many of these evaporate upon closer examination of the rates.
The best rates are often only available at 60 percent loan-to-value and come with hefty product fees, geographic limitations, or other restrictions.
The best deal, grabbing the headlines from 1,548 two-year fixes, comes at 2.85 percent from CHL Mortgages. However, the loan is only available up to 75 percent loan-to-value and comes with an eye-watering arrangement fee of seven percent of the advance.
That's a hefty £14,910 fee on top of the maximum borrowing of £213,000 on an average home costing £284,000.
Shopping around instead of going for the headline deals may pay off. For instance, Accord Mortgages has a two-year fix at 5.55 percent with no product fees at the same 75 percent loan-to-value.
| Deal | No of deals | Rate | Lender |
|---|---|---|---|
| Best fixed rates | |||
| 2 yr fixed | 1548 | 2.85% | CHL Mortgages |
| 3 yr fixed | 89 | 4.03% | BM Solutions |
| 5 yr fixed | 1772 | 4.22% | BM Solutions |
| Best loan-to-value deals | |||
| 60% | 3765 | 2.85% | CHL Mortgages |
| 75% | 2518 | 2.85% | CHL Mortgages |
| 85% | 542 | 3.08% | Molo Finance |
| Best variable rates | |||
| Discounted | 123 | 2.80% | Stafford Building Society |
| All variable rates | 152 | 2.90% | Stafford Building Society |
| Best specialist deals | |||
| Best corporate deal | 10 | 3.09% | CHL Mortgages |
| Best first time landlord deal | 10 | 4.54% | HSBC |
| Best of all buy-to-let mortgages | 5100 | 2.85% | CHL Mortgages |
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