Interest rate fall triggers buy-to-let boost as landlords take advantage of historical lows

Following persistent cuts, interest rates on buy-to-let mortgages are now at an all time low. UK landlords are taking full advantage…

2016 has been a year of ups and downs for UK landlords.

First they found out their tax bills would climb. Then they were hit with stamp duty hikes. Then the public voted to leave the EU, sending financial markets spinning first up then down.

But in the background, the price of bricks and mortar continued to rise. No matter what the world laid out, house prices increased.

And as the year draws to a close, we’re seeing yet another buy-to-let boost. Because interest rates are now lower than they’ve ever been before.

Buy-to-let interest rates hit rock bottom

Buy-to-let interest rates, at least – hence the buy-to-let boost.

New statstics from show 75% loan-to-value mortgages come with an average 3.96% interest rate – the first time the figure has ever fallen below the 4% mark.

That’s almost half a percent lower than this time six months ago, and those with more to invest get an even better deal.

Landlords with 40% deposits get an average of 3.48%. Again, considerably less than rates back in summer.

Despite government reforms, second homes still seem like one of the best investments out there. So what is it that’s stopping those yet to invest?

Buy-to-let boost thanks to tumbling rates

Fees are presumably the biggest hurdle. Stamp duty is a pain. There are agency fees and maintenance.

But interest – also known as the cost of borrowing – is by some distance the biggest fee most landlords ever have to pay.

And interest rates are tumbling, triggering the buy-to-let boost. Mortgages are cheap – making second homes one of the best performing investments in the UK.

In fact, if an analysis by estate agent Leaders is anything to go by, they may even be the best investment out there…

The best-performing investment type in the UK?

“The cost of borrowing for investors has fallen considerably in recent months,” says Allison Thompson, who heads up Leaders. “With lower mortgage costs and the trend for longer tenancies, buy-to-let remains not only the best-performing investment type in the UK, but also a secure long-term option.”

The “best-performing investment type” is a big claim. Its validity depends on your appetite for risk.

But balancing out risk and return, it’s hard to argue with Thompson’s comments.

Last week, the government admitted it will fail to meet its ambitious house building targets over the next four years. Even if it did, most analysts reckon demand would outstrip supply.

House prices are rising. The cost of borrowing has reached a historical low. Has there ever been a better time to become a landlord?

Buying a second property isn’t for everyone…

Again, as the recent buy-to-let boost shows, more than a few people have decided now’s the time.

But following the crowd isn’t always smart.

If you’ve been thinking of becoming a landlord, it’s always worth speaking to an expert. Your personal situation is entirely unique.

Buying a second property isn’t for everyone. But those it is for could do worse than pick up the phone.

House prices are rising. Mortgages are cheap.

Has there ever been a better time to become a UK landlord?