Call for your free quote 0800 955 0058

Buy-to-let investors benefit from lower fixed mortgage rates

Fixed rate mortgage rates are reducing and set to fall further to the benefit of buy-to-let investors with more competition in 2020.

More competition from lenders in 2020 will help buy-to-let investors by reducing the interest on fixed mortgage rates according to Moneyfacts, already lower by a quarter of a percent over the last year.

Lenders have reduced interest rates by 0.30% for both short-term and long-term mortgage deals applying to new purchases and buy-to-let landlords remortgaging existing properties.

First time buyers, home movers and remortgage buyers have benefited from lower rates with their mortgage interest repayments to lenders, making home ownership more affordable.

Rachel Springall finance expert at Moneyfacts said, it’s encouraging to see that, despite economic pressures, the buy-to-let market is expected to grow in 2020.

Fixed mortgage rates reducing

Reducing interest costs is likely to be an important consideration for buy-to-let landlords as the government has changed tax relief to their detriment.

Taxation for buy-to-let landlords has been increasing since April 2017 as the government has been phasing out the ability to deduct mortgage costs from rental income which ends in April 2020.

This table from Moneyfacts shows two and five fixed mortgage rates for the past five years to February 2020.
Year 2-year fixed 5-year fixed
Feb 15 3.5% 4.39%
Feb 16 3.25% 4.09%
Feb 17 2.90% 3.74%
Feb 18 2.90% 3.44%
Feb 19 3.07% 3.56%
Feb 20 2.75% 3.20%
The two-year fixed rates have reduced from 3.07% last year to 2.75% in February 2020 and for five-year mortgages these are 3.20% now having been 3.56% a year ago.

Savings from lower interest rates can be substantial and for a landlord with a five-year fixed rate mortgage taken out in 2015 this has reduced by 1.19%.

If a landlord had an interest only mortgage of £250,000 on their rental property with a 25-year term starting in 2015 would reduce their payments by £1,947 each year.

Landlords could set-up as a limited company where interest payments can be used as a cost although this may involve stamp duty tax corporation tax on profits.

Interest costs are lower for the equity release mortgage buyer, securing fixed rates at under 3.0% without evidence of earnings and using the cash to maintain their lifestyle, home improvements or purchasing a new car.

Factors impacting mortgage rates

Fixed mortgage rates are influenced by a number of factors but mainly by the ability of banks to secure access to low cost money they can lend to homeowners.

The main source for banks is savers or borrowing from other banks using money markets at a particular ‘swap rate and specified period of time.

Swap rates are sensitive to global economic changes, rising or falling based on the expectation of future interest rates and inflation which impacts the fixed mortgage rates paid by homeowners.

With lower fixed interest rates, first time buyer mortgage repayments are going to be more affordable compared to their household income and they are more likely to get on the property ladder.

For remortgage buyers switching to a lower preferential rate can reduce your monthly repayments allowing you release capital to make home improvements without increasing your monthly repayments.

What are your next steps?

Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.

Learn more by using the mortgage cost calculators, property value tracker chart and equity release mortgage calculator. Start with a free mortgage quote or call us and we can take your details.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to repay an interest only mortgage or even buy a more expensive home.

Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%

The latest mortgage news

25 Jun 2021

Seaside towns in Britain with house prices up 10pc due to strong demand

Demand for coastal living has seen house prices in Britain’s seaside towns rise 10% over the year as homeowners change their lifestyle.

24 Jun 2021

House prices at record levels with lack of property choice for buyers

Supply of properties on the market and available to buyers is an all-time low at the same time house prices are at record levels.

11 Jun 2021

Prices for house sales are rising four times faster than flats

Strong demand for houses has driven price growth up 5.2% in the last year which is over four times more than the 1.1% growth for flats.

28 May 2021

Fixed rate mortgage deals fall to under 1pc as lenders compete for borrowers

Fixed rate mortgages are cut to 0.99% for borrowers with large deposits looking to remortgage as competition increases from lenders.

Call for your free quote 0800 955 0058


    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


    Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.


    9th Floor, 30 Crown Place
    London, EC2A 4EB

    0800 955 0058


    London City Mortgages Limited is a registered company in England & Wales under company number 09278987. London City Mortgages Limited is an Appointed Representative (FCA no. 655965) of Blackstone Moregate Limited (FCA no. 459051) which is authorised and regulated by the Financial Conduct Authority. LCM and LCM Equity Release are trading names of London City Mortgages Limited.

    2021 © London City Mortgages.
    Website designed & developed by Spyre Media