Buy-to-let mortgage rates drop as lenders compete for landlord business
Landlords weighing up new purchases or refinancing existing properties could benefit from a more competitive
market, with several lenders cutting rates and easing criteria this summer.
This shift follows a year of rising borrowing costs that squeezed many landlords’ margins. Now, with inflation easing and the Bank of England expected to cut interest rates later in 2025, lenders are moving early to attract landlord borrowers—especially professional investors with strong portfolios.
Big lenders cut rates as market warms up
Several major lenders, including The Mortgage Works, BM Solutions and Santander, have launched buy-to-let rate reductions in recent weeks. Some two-year fixed rates are now dipping below 4.5% for lower loan-to-value (LTV) deals, while five-year fixes are edging closer to 4%.
According to financial data site Moneyfacts, the average
in July 2025 sit at 5.38%, down from 5.72% three months ago. While rates remain high compared to the ultra-low deals available before 2022, the recent cuts suggest a softening trend that could improve landlords’ returns—especially when combined with strong rental yields in many UK regions.
Chris Sykes, technical director at Private Finance, said:
“There’s growing competition in the buy-to-let space again. Lenders are starting to price in future base rate cuts, and that’s giving landlords better refinancing options.”
Portfolio landlords in the best position
Lenders are increasingly targeting professional landlords with multiple properties, offering preferential pricing and more flexible underwriting. For example, some lenders now allow top-slicing of personal income to support affordability, while others offer streamlined processes for
.
Many landlords are opting to remortgage into five-year fixed rates to secure certainty, even if rates might fall further in the next 12 to 18 months. Those buying in limited companies continue to benefit from tax advantages on mortgage interest, making company structures the preferred route for new purchases.
Regional rental yields remain robust too. According to Zoopla, gross yields now exceed 7% in areas such as the North East, Wales and the Midlands—well above the cost of borrowing in many cases.
Cautious optimism, but margins still tight
Despite improving mortgage deals, landlords remain cautious. Regulatory pressure, high entry costs, and local licensing schemes continue to deter some would-be investors. Many are focusing on adding value through refurbishments or energy efficiency upgrades rather than speculative purchases.
Still, for those with strong cash flow and a long-term view, the current climate offers opportunity. Rising rents and stabilising finance costs could spell a return to growth for portfolio landlords in particular.
Chris Norris of the National Residential Landlords Association (NRLA) commented:
“Landlords are adapting. While conditions remain challenging, those who invest strategically and manage costs carefully can still achieve solid returns—especially in high-demand rental areas.”
Reflecting on the shift
The buy-to-let mortgage market is showing signs of life again. For savvy landlords, falling rates could mean the difference between treading water and moving forward. As the market recalibrates, investors willing to act decisively may well gain the edge.