Are Buy-to-Let Mortgage Rates Finally Coming Down?

Light At The End Of The Tunnel

After a prolonged period of rising interest rates and tougher affordability, many landlords are now asking the same question: are buy-to-let mortgage rates finally starting to come down?

While we are not yet seeing a return to the ultra-low rates of the past, there are clear early signs that the buy-to-let mortgage market is easing, with several major and specialist lenders already cutting rates. This shift is particularly relevant for landlords looking to refinance, expand portfolios, or reassess limited company borrowing.

The last few years have been challenging for landlords. After a prolonged period of historically low interest rates, many of us became accustomed to exceptionally cheap borrowing. Only recently, I came across an old mortgage statement showing an interest rate as low as 1.84% — a level that now feels a long way behind us. To put today’s market into context, it is now common to see buy-to-let mortgage rates as high as or exceeding 5.99% especially when looking at Ltd Company Buy To Let Mortgages. This represents a substantial increase, and one that has a direct and significant impact on rental profitability.

However, headline interest rates alone do not fully convey the scale of the issue, particularly for properties held in personal names, where landlords are limited to a 20% tax credit on finance costs rather than full relief. As a result, it is increasingly common to see these properties operating at a cash-flow deficit, especially where borrowing levels are high and loan-to-value ratios are elevated. One option is incorporation but that comes at a cost, if anyone is interested in this topic let me know and I will include it at some point in the future.

Where the Buy-to-Let Mortgage Market Stands

Over the last couple of years, buy-to-let investors have faced higher borrowing costs driven by:

• Rising Bank of England base rates

• Increased lender stress testing

• Reduced product availability, particularly for limited company structures

However, towards the end of 2025 and into early 2026, momentum has started to shift. Swap rates have eased, competition between lenders has increased, and early rate reductions are now filtering through to buy-to-let products.

Why Rates Are Starting to Ease

The main drivers behind this change include:

• Improving interest-rate expectations: Financial markets have increasingly priced in a more stable interest-rate environment.

• Competitive pressure between lenders: As funding costs fall, lenders are keen to attract business.

• Stronger focus on landlord retention: Remortgage and product-transfer pricing has become more competitive.

Together, these factors are creating downward pressure on buy-to-let mortgage pricing, even if progress remains gradual.

Live Examples: Lenders That Have Cut Buy-to-Let Rates

Importantly, this is not just speculation — real lenders have already taken action.

HSBC

HSBC has been one of the first major high-street banks to announce mortgage rate reductions, including on buy-to-let products. As a large mainstream lender, its pricing decisions are often viewed as an early signal of broader market direction.

For landlords, HSBC’s move suggests that competitive pressure is beginning to build among top-tier lenders.

The Mortgage Works

A key name in the landlord space, The Mortgage Works has cut rates across a range of buy-to-let products, including:

• Two-year fixed rates

• Five-year fixed rates

• Limited company buy-to-let deals

This is particularly significant, as TMW focuses heavily on professional landlords and portfolio borrowing — often a leading indicator of market sentiment.

Pepper Money

Specialist lender Pepper Money has also reduced buy-to-let pricing, including limited company mortgages, while at the same time widening lending criteria. Moves like this indicate growing confidence among specialist lenders who serve landlords with more complex needs.

What This Means for Landlords

While buy-to-let rates remain higher than historic lows, the direction of travel matters:

• Remortgaging opportunities are improving

• More lenders are re-entering the market competitively

• Limited company landlords are starting to see better pricing options

That said, rates are still sensitive to wider economic conditions, and pricing can change quickly. Landlords should focus on whole-of-market comparisons, not just headline rates from individual banks.

Outlook: What Happens Next?

If funding costs continue to ease and competition remains strong, further buy-to-let rate cuts are likely over the coming months. However, the market is expected to move in stages rather than all at once.

Key takeaway is this:

Buy-to-let mortgage rates are no longer moving relentlessly upwards — and in many cases, they are already coming down.