Responding to the ongoing events happening on the global financial scene, many mortgage lenders have slashed a number of buy-to-let mortgage schemes. A consequence of this is a rejuvenated sense of competition among mortgage lenders, each motivated to capitalise on this unique window of opportunity to attract more customers. This direction will benefit many within the buy-to-let market, as the widespread reduction of basic mortgage rates will facilitate more investment and participation within the housing market.
Causal Factors
A significant factor underwriting the increase in product choices is uncertainty over the global financial market, for the tariff policies launched by Washington earlier this month have caused major disruptions in the global supply chain, stock values, and business investment. With industry experts unable to reliably forecast the developments for the financial market, the feeling of apprehension exhibited by industry analysts and business leaders is causing major shifts within several markets.
Such a shift is projected to reorientate the Bank of England’s interest rate strategy. Nick Mendes, a broker at John Charol, argues that ‘just over a week ago, markets were expecting two further Bank of England rate cuts this year. Now, they are pricing in four. If that plays out, the Bank Rate would fall from 4.5% now, to 3.5% by the end of the year – a significant shift driven by fears that a prolonged trade war could slow global growth’.
By the same token, it is important to emphasise that product availability has been steadily improving over the last year, informed in large part by the consistent increases in product demand and the stability of the UK housing market.
According to Moneyfacts, the volume of mortgage products available to customers is currently standing at approximately 6,870. Not only is this an 8.9% increase compared to April 2024, but it is also the highest volume of product options since October 2007, a period that had 7,421 mortgage products available to customers.
Mortgage Rates
Coventry Building Society has taken the lead in offering some of the best mortgage schemes to consumers. Coventry is offering a two-year fixed mortgage rate at 3.89% with a £999 fee. This is an enticing scheme. For example, if a customer wants to take a mortgage of £200,000 over 25 years, this will amount to paying around £1,044 a month.
Babek Ismayil, chief executive of OneDome, argues that ‘Coventry might be leading the charge, but they won’t be the last’, adding that ‘if this trend continues, we could see more lenders cutting rates in the days and weeks ahead’.
Such a chain reaction has been observed with mortgage lenders such as Zephyr Homeloans, ModaMortgages, and Keystone Property Finance lowering a number of mortgage schemes. ModaMortgages has reduced rates by up to 20 basis points: Two-year fixed products are now beginning at 3.39% and five-year fixes at 4.89%. Similarly, Keystone Property Finance has cut rates by up to 10 basis points, with products starting at 3.13% at 70% LTV. Zephyr Homeloans has also slashed a number of mortgage schemes by up to 20 basis points.
This trend can be further seen by looking at the reductions offered by even more mortgage lenders: Barclays by up to 38 basis points, Investec by up to 30 basis points, TBS by up to 25 basis points, MPowered Mortgages by up to 21 basis points, Gen H and LendInvest by up to 20 basis points, and Molo by up to basis 10 points.
These schemes may be subject to further revisions depending on how the global and domestic economic developments unfold. Yet right now these are positive steps in the right direction, as these basis point reductions across the mortgage industry have lowered the average interest bar for consumers. It has also sparked greater amounts of competition between mortgage lenders, which will ultimately benefit customers in having agency in selecting more favourable mortgage schemes.
Buy-To-Let Industry
According to the Financial Reporter, the average interest rates on buy-to-let loans have dropped from 5.7% in 2024 to 5.09% in 2025. Rental yield has also notably increased from 6.74% in the fourth quarter of 2023 to now 7%.
Twenty7tec has recorded a 22.9% increase in buy-to-let searches within the £150,000 to £250,000 price bracket. Commenting on these results, Nathan Reilly, director at Twenty7tec, observes that ‘we are noticing that landlords are acting more decisively when it comes to their next steps, and we’re seeing a significant increase in buy-to-let remortgages as property investors look to future-proof their portfolios’.
Just as mortgage lenders are taking advantage of the present financial climate to attract more customers, so too is this climate offering an enticing opportunity for customers to invest in the buy-to-let market. Accordingly, it may be worth considering whether now is the time to enter the buy-to-let market or further expand your property portfolio.
