Product availability and pricing improve for property investors
Recent adjustments to mortgage stress testing rules are reshaping the buy-to-let lending market, according to new research from mortgage adviser Alexander Hall.
The Bank of England’s March 2025 update removed the requirement for lenders to apply a notional interest rate — previously the standard variable rate plus 1% — when assessing affordability for fixed-rate products under five years. Lenders now have greater discretion to base assessments on actual product terms, leading to broader changes across the industry.
Several major lenders have already updated their affordability criteria. While specific approaches differ, the overall effect has been a more accessible and competitive environment for landlords.
Alexander Hall’s analysis shows a notable increase in product availability. The average number of buy-to-let mortgage products between January and June 2025 reached 2,752, up 41.9% from the same period last year. This marks the largest annual increase among all borrower groups.
In comparison, product numbers for first-time buyers rose by 16.2%, while options for remortgaging and home movers grew by 3.2% and 2%, respectively.
Interest rates have also declined. The average two-year fixed buy-to-let mortgage at 75% loan-to-value dropped from 4.78% in May 2023 to 3.93% in May 2025 — a decrease of 0.85 percentage points over two years and 0.61 points year-on-year. Some lenders have recently introduced sub-3% rates for buy-to-let products, further enhancing the sector’s appeal to investors.
These shifts are expected to encourage increased buy-to-let investment, particularly from portfolio landlords and professional investors who have faced tighter affordability checks in recent years.
“The easing of stress testing rules is an important step forward for the buy-to-let sector,” said Richard Merret, managing director at Alexander Hall. “We’ve already seen a noticeable improvement in product availability and borrowing affordability, helping landlords better manage their portfolios and capitalise on new opportunities.
“At a time when the rental market is under pressure from high demand and low supply, these changes offer a much-needed boost to investor confidence and market fluidity.”
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