Buy to Let Mortgage Market Update

Buy to let mortgage options have narrowed this month, though borrowers enjoy a slightly longer window to secure deals. While overall choice has dipped compared to the previous month, average mortgage rates have edged downwards. As a result, the market signals cautious optimism for those looking to lock in a deal.

Mortgage Choice Contracts Month-on-Month

In August 2025, the number of available mortgage products fell to 6,842. This marks a slight reduction from the previous month, suggesting a more conservative approach from lenders. Despite the monthly fall, the market remains more diverse than it was a year ago, when borrowers could choose from 6,657 deals.

Industry analysts point out that fluctuations in product numbers are not unusual, particularly when lenders reassess risk in light of economic indicators. Some financial institutions appear to be fine-tuning their offers, resulting in shorter bursts of product availability.

Shelf-Life Extends, Giving Borrowers More Time

While the range of mortgages on the market has narrowed, the average shelf-life of a deal has risen to 17 days, up from 16 days last month. This slight increase means borrowers now have marginally more breathing space to compare offers and make decisions.

A year ago, the average shelf-life was also 17 days, showing little change over the past twelve months. However, two years ago, during market turbulence, deals lasted just 13 days before lenders quickly withdrew or altered them. The current longer shelf-life reflects a calmer market environment – albeit one still subject to swift adjustments if economic conditions change.

Fixed Rates Ease Towards the 5% Threshold: Buy to Let Mortgage

Average interest rates for both two-year and five-year fixed mortgages fell to 5.01% in August, each dropping by 0.08% and 0.07% respectively from the previous month. These reductions, while modest, mark continued progress towards more affordable borrowing costs.

The last time both fixed-term averages dipped below 5% was in September 2022 for two-year deals (4.24%) and May 2023 for five-year deals (4.97%). Although the market is not quite there yet, current figures indicate a slow but steady approach towards that psychological barrier.

Comparing this year with last, five-year fixed rates have fallen by 0.37% – from 5.38% in August 2024 to 5.01% now. The two-year fixed average has seen a sharper decline of 0.76%, down from 5.77% over the same period.

Overall Mortgage Rates Continue to Fall

The Moneyfacts Average Mortgage Rate (MAMR) dropped from 5.11% last month to 5.04% in August 2025. Year-on-year, this represents a notable fall from 5.65% in August 2024, reflecting improved affordability for borrowers. Furthermore, it marks a dramatic drop from 6.52% in August 2023, when inflation and base rate hikes pressured the market.

Not all mortgage categories have seen movement. The average two-year tracker variable remains at 4.91%, showing stability in this segment. Meanwhile, the average Standard Variable Rate (SVR) holds steady at 7.42%. This is the rate borrowers revert to when their fixed or tracker mortgage deal comes to an end.

This is still well below the record 8.19% seen in late 2023 but remains substantially higher than most fixed-term deals available today.

Lenders’ Strategies: A Balancing Act

According to Moneyfacts finance expert Rachel Springall, lenders’ approaches to pricing over the past month have varied widely. The churn of products has led to a dip in overall choice, offsetting gains seen in July.

“Despite the cautious stance, rate reductions have prevailed, bringing the average mortgage rate closer to the 5% mark,” Springall observed. She noted that while the market is edging towards more borrower-friendly rates, lenders are likely to remain measured in their cuts over the coming weeks.

The Base Rate Factor

The Bank of England’s recent decision to hold its base rate has had a mixed impact. While some had hoped for an immediate rate cut, the decision contributed to a rise in swap rates – key indicators that influence mortgage pricing.

Springall cautions that lenders may adopt a “low and slow” approach to further cuts until there is more clarity on the economic outlook. This includes the potential ripple effects of the upcoming Autumn Budget, which could significantly bolster market confidence. On the other hand, it could also trigger fresh volatility and unsettle both lenders and borrowers in the mortgage market.

“If inflation rises again or uncertainty increases, hopes for further base rate cuts this year could quickly evaporate,” she warned.

Two Years Since a Market Peak: Buy to Let Mortgage

It has now been two years since the average two-year fixed rate reached its highest point in 15 years, driven by a flurry of repricing from lenders. Back then, mortgage deals vanished from the market in just 13 days on average, as financial institutions scrambled to adjust.

Today’s shelf-life of 17 days is a marked improvement for borrowers, offering more time to compare deals and secure favourable terms. Yet, this is still far from a period of complete stability for the mortgage market. Moreover, lenders continue to adjust their offerings regularly in response to ongoing market shifts.

Why Refinancing Remains Crucial

Borrowers currently on SVR rates could save significantly by moving to a fixed-term deal. The gap between the average two-year fixed rate and the average SVR is now over 2%, compared to just 1% in August 2023. For many households, that difference can equate to thousands of pounds in annual savings.

Springall emphasises the importance of reviewing mortgage arrangements promptly: “The incentive to refinance is much stronger today. The cost of sitting on an SVR is simply too high for most borrowers to ignore.”

The Impact on First-Time Buyers and High-LTV Borrowers

Looking ahead, the landscape for first-time buyers and those borrowing at higher loan-to-value (LTV) ratios could shift further. Changes to loan-to-income (LTI) rules are expected to influence affordability assessments, potentially making it easier – or in some cases harder – for certain buyers to secure a mortgage.

For those at the start of their property journey, staying informed about lender criteria and market movements will be essential in navigating the months ahead.

Key Takeaways for Borrowers

• Mortgage choice has narrowed slightly this month but remains above last year’s levels.
• Average shelf-life has lengthened, giving borrowers more time to act.
• Rates are trending downwards, with both two- and five-year fixed terms now averaging 5.01%.
• SVRs remain high, making refinancing an attractive option for many.
• Economic and political factors – including the base rate and Autumn Budget – will continue to shape the market.

Outlook for the Remainder of 2025: Buy to Let Mortgage

While the mortgage market remains competitive, borrowers should prepare for gradual rather than dramatic rate cuts. Stability in tracker and SVR rates, combined with the cautious pace of fixed-rate reductions, points to a measured recovery in affordability.

For those ready to remortgage or secure a first-time buyer deal, now is an ideal moment to explore the market. However, act quickly, as upcoming economic or political changes could prompt lenders to tighten their offerings again.