Understanding Today’s Buy-to-Let Rates: A Window of Opportunity

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Buy to Let Mortgage Rates: Why Now Is the Time to Act

As we head into summer, the UK mortgage market is once again shifting beneath our feet. For landlords, timing is everything, and right now, the clock might be ticking faster than you think.

SWAP Rates: The Calm Before Another Storm?

After a brief period of decline, SWAP rates - the key driver behind fixed mortgage pricing - are creeping back up. Just last week, 5-year swaps rose from 3.6% to 3.8%, a 20 basis point jump. While we're still in a better position than this time last year (when swaps hovered just under 4%), the recent uptick is a red flag.

Why the reversal? A mix of global economic jitters, shifting investor sentiment, and recalibrated expectations around UK interest rates. While many landlords are holding out for a potential Base Rate cut from the Bank of England in June, it's crucial to understand that SWAP rates already price in expected base rate movements. So even if the MPC does cut rates, it may not translate into cheaper fixed-rate mortgages.

Key takeaway? If you're eyeing a new mortgage, now is a smart time to lock in. Most lenders allow you to switch to a better rate before completion, so you’re not losing flexibility but gaining security.

Lender Pricing: A Mixed Bag of Reductions

Despite rising SWAP rates, we’re still seeing a lag effect in lender pricing. Several lenders have recently released more competitive products in response to earlier swap rate drops:

Landbay: Up to 0.8% reductions on HMO products for first-time landlords. Some 2-year fixes now start from 3.74%.

Aldermore: Selective reductions of up to 0.3%, though not across the board.

Foundation Home Loans: Slight reductions on some products, but a 0.4% increase on short-term lending.

NatWest: Up to 0.2% off selected rates.

If you’ve already got an application in, it’s worth checking whether you can switch to a lower rate.

Where Are the Best Rates Right Now?

Let’s break it down using a typical scenario: a £250,000 property with a 75% loan-to-value mortgage.

Personal Name Mortgages

5-Year Fix: 4.27% with a £995 fee. Rental stress test approximately 139x monthly rent.

2-Year Fix: 3.04% with a 3% fee. Rental stress test approximately 125x rent.

Variable/Discounted: From 5.44% with no fee.

Limited Company Mortgages

5-Year Fix: 5.34% with no fee. Rental stress test up to 180x rent.

2-Year Fix: 5.34% with £1,500 fee. Rental stress test approximately 131x rent.

Variable: 5.34% with a 3% fee. Rental stress test approximately 137x rent.

Pro tip: Limited Company products continue to offer more generous rental calculations, especially on 5-year fixes.

Search for your next buy to let mortgage using our FREE calculator.

Lender Criteria Changes: More Flexibility for Landlords

Two notable updates this week:

Paragon has lowered its rental stress test for 5-year fixes on standard properties (not HMOs or MUFBs), now assessing at 4.5%. This means you can borrow more per pound of rental income.

Moda Mortgages now accepts day-one remortgages, which is a big win for landlords using bridging finance or injecting personal capital into refurb projects. While Moda isn’t the only lender offering this, its entry into the space adds more choice.

Rental Yields: A 14-Year High

Let’s end on a high note. According to Paragon’s latest data, average rental yields hit 7.11% in April 2025, the highest since February 2011. This surge is driven by:

Slower house price growth

Continued rent increases

High tenant demand

Ongoing undersupply in the private rental sector

For landlords, this means stronger returns and better affordability metrics when applying for finance.

Final Thoughts

The mortgage market is moving fast, and not always in the direction landlords might hope. With SWAP rates rising and lender pricing still catching up, now is a strategic time to secure a rate. You’ll protect yourself from future increases and still have the flexibility to switch if rates fall.