Buy-to-Let Mortgage Rates Tumble Despite Bank of England Stalemate

For investors, understanding landlord mortgage rates is key in a 2025 market full of conflicting signals and opportunities. The Bank of England (BoE) recently opted to hold the UK’s base rate steady at 4%, a move widely anticipated ahead of the upcoming Autumn Budget. Yet, for landlords scrutinising their finances, this stability belies a much more dynamic and optimistic trend: buy-to-let mortgage rates are continuing to fall.

This year has seen a consistent downward trajectory in borrowing costs, a welcome relief after the turbulence of previous years. Despite minor fluctuations tied to wider economic news, the market has proven resilient. This persistent drop has pushed the average buy-to-let mortgage rate below the 5% threshold, marking its lowest point since the summer of 2022, according to data from Moneyfactscompare. This reduction significantly improves affordability calculations and boosts potential profitability for investors across the UK.

Lender Competition Defies the Base Rate Hold

The BoE’s decision to hold the base rate is only one piece of the puzzle. The real driver behind cheaper mortgages is fierce competition among lenders, who are battling for business while hedging against future swap rate movements.

This competition is so pronounced that many lenders preempted the BoE’s announcement. The Mortgage Works, Nationwide’s specialist arm, sliced rates before the decision. Consequently, this reduced selected products by up to 0.30 percentage points. This included a notable 0.10% reduction on a new two-year fixed-rate product, offering 2.64% (at 65% LTV with a 3% fee).

This momentum didn’t slow after the announcement. Proving the market’s independent streak, Coventry for Intermediaries unveiled its own series of rate cuts the following day. Jonathan Stinton described the move as a clear strategy. Specifically, it aims to “rebuild confidence” for borrowers waiting to act.”

Limited Company Structures and Landlord Mortgage Rates

One of the most significant shifts driving the market is the professionalisation of property investment, largely accelerated by tax changes like the removal of mortgage interest relief. Landlords have increasingly moved their portfolios into limited company structures to maintain tax efficiency.

This isn’t a minor trend; it’s a structural transformation.

• Research from Foundation Home Loans reveals that 20% of all landlords now hold at least one property within a limited company.
• This figure jumps to 30% for portfolio landlords.
• The average proportion of a landlord’s portfolio in a company has more than doubled. In fact, it soared from 36% in early 2020 to 74% by mid-2025.

Lenders, acutely aware of this shift, are rolling out the red carpet. They have not only increased the number of available products but have also made them significantly cheaper. Moneyfactscompare reported that the number of two and five-year fixed deals for limited companies rocketed to 1,730 in October, up from just 841 two years prior. Over that same period, the average rates on these specialist mortgages fell by more than one percentage point.

Landlord Mortgage Rates: 2025 Review and 2026 Forecast

A Year of Cautious Recovery

From an investment standpoint, 2025 has been a far more positive year than 2024. The market has been fuelled by a healthier balance of supply and demand, and importantly, stronger rental yields. This, combined with the steady decline in borrowing costs, has rebuilt confidence and spurred activity.

The Road Ahead: Hurdles and Hope

In the immediate term, one hurdle remains: the Autumn Budget. Chancellor Rachel Reeves’ speech on 26th November is causing a temporary lull. As Rightmove’s mortgage expert, Matt Smith, noted, lenders have “hit the pause button” in anticipation.

However, the consensus is that the downward pressure on rates will resume. Smith suggests a further base rate cut is possible by the end of the year or, failing that, in early 2026.

The long-term outlook appears even brighter. Frances McDonald, director of research at Savills, projects a period of sustained growth, forecasting that UK average house prices will rise by 22.2% by 2030. This optimism is based on a “materially stronger UK economy beyond 2026” and more relaxed mortgage rules, which could allow buyers to secure larger loans. For property investors, the message is clear: while short-term pauses are expected, the underlying market drivers point towards continued opportunity.