Buy-to-let mortgage rates fall to new low in January, according to Moneyfacts survey

The cost of buy-to-let mortgages has fallen to a new low, according to new figures.

The latest mortgage survey from Moneyfacts suggests that fixed-rate deals now sit at an average of just above 3.4 per cent, while variable loans are just above 3.2 per cent.

Rates have fallen dramatically over the last five years. In January 2012, Moneyfacts data showed that fixed deals cost around five per cent, with variables at around 4.4 per cent.

Market contracting

But analysis by the Financial Times suggests that the number of buy-to-let mortgages on offer is likely to fall sharply in the coming months.

The number of deals on offer has risen markedly, from 278 in January 2009 “to over 1,400 today.”

But the newspaper expects the market to shrink significantly as a result of tax changes and regulatory tightening. According to Moneyfacts, 74 buy-to-let mortgage deals have been taken off the market in the last month alone.

Tax and regulation

In November, the Bank of England was given new powers to restrict lending based on the value of the property and the potential rental income.

Meanwhile from April the Treasury will begin the process of scrapping tax relief on mortgage interest payments, in a phased move that will be completed in 2020. From then, relief will be available only at the 20 per cent basic rate.

Are you looking to lock in a buy-to-let mortgage while rates are low? Let us know in the comments.

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