Paragon Bank cuts buy-to-let mortgage rates to attract landlords

Paragon Bank cuts buy-to-let mortgage rates to attract landlords

Paragon Bank has reduced interest rates on a range of five-year fixed buy-to-let mortgages, including those for single properties, HMOs and multi-unit blocks, offering landlords more competitive borrowing options.

Paragon Bank announced rate reductions of 15 basis points across selected five-year fixed-rate buy-to-let mortgage products. These apply to landlords purchasing or remortgaging single self-contained properties (SSCs), houses in multiple occupation (HMOs) and multi-unit blocks (MUBs). The changes affect products with loan-to-value (LTV) ratios of 60%, 70%, 75%, and 80%, and include some limited edition offers as well as the bank’s Tailored proposition for cases outside standard lending criteria.

Within the SSC range, rates now start from 4.95% on Paragon’s green mortgage products, which are available for properties with Energy Performance Certificate (EPC) ratings of A to C. Equivalent products for properties with lower EPC ratings of D or E start from 5.00%. For HMOs and MUBs, rates begin at 5.10%. Landlords can select from nil-fee, percentage-fee, and fixed-fee options, with some products also offering £1,000 cashback incentives. These mortgage products are available to both individual and limited company landlords across England, Scotland, and Wales.

Details of the mortgage rate reductions and product range

James Harrison, Product Manager at Paragon Bank, explained that recent cooling in swap rates prompted the bank to adjust its buy-to-let mortgage pricing. The reductions aim to reflect current market conditions and provide brokers with a broader selection of products to meet their clients’ borrowing needs. Harrison emphasised that the variety of options helps match borrowing requirements based on headline rates, fee structures, leverage, and property types.

The inclusion of a green mortgage product starting at 4.95% is notable, as it incentivises landlords to invest in properties with higher energy efficiency ratings. This aligns with broader government and industry efforts to improve the energy performance of the private rented sector, which faces increasing regulation and tenant demand for sustainable homes. The availability of tailored mortgage products also supports landlords whose applications may not fit conventional lending criteria, potentially easing access to finance for a wider range of portfolio sizes and property types.

Context of mortgage lending in the buy-to-let sector

Buy-to-let landlords have faced rising borrowing costs in recent years due to increasing base rates and stricter lending criteria introduced after regulatory reforms. These factors have squeezed yields and made financing more challenging, especially for smaller landlords or those managing properties with lower EPC ratings. The reduction in mortgage rates by Paragon Bank comes amid a competitive lending environment where providers seek to attract landlords by offering more flexible and affordable products.

Energy efficiency remains a key consideration for landlords, as minimum EPC standards for rental properties have tightened and are expected to become more stringent. Mortgages linked to green criteria may become more prevalent, reflecting policy trends encouraging landlords to upgrade properties. Additionally, the availability of cashback offers and varied fee structures provides landlords with more options to manage upfront costs and ongoing expenses.

Practical implications for landlords and letting agents

For landlords, the rate reductions present an opportunity to refinance existing buy-to-let mortgages at lower costs or to finance new acquisitions more affordably. Those with properties meeting EPC A-C ratings can particularly benefit from the green mortgage range, potentially reducing borrowing expenses while aligning with energy efficiency goals. Landlords with HMOs or multi-unit blocks also gain from competitive rates starting at 5.10%, which may support portfolio diversification.

Letting agents advising landlords should update their knowledge of available mortgage products to include these new rates and options. They can assist clients in assessing eligibility for tailored products and green mortgages, which may influence investment decisions and property upgrades. Brokers can leverage the range of fee structures and cashback incentives to tailor financing solutions to landlords’ financial strategies.

Remaining uncertainties and considerations

While the rate reductions are welcome, landlords should remain aware that mortgage offers depend on individual circumstances and lending criteria, which can vary widely. The availability of products and specific terms may change as market conditions evolve. It is also unclear how widespread similar rate reductions will be across other lenders, which affects competitive positioning.

Landlords should monitor regulatory developments around energy efficiency standards, as these will increasingly influence mortgage eligibility and property value. The impact of the Renters’ Rights Act and other tenancy reforms may also affect landlords’ financial planning and risk assessments. Staying informed about mortgage market trends and regulatory changes remains essential.

What landlords should do now

• Review current mortgage arrangements to identify opportunities for refinancing at lower rates.
• Assess the EPC ratings of rental properties to determine eligibility for green mortgage products.
• Consult with mortgage brokers or financial advisers about the new product range and fee options.
• Stay updated on evolving energy efficiency regulations and tenancy law changes that could affect financing and rental income.
• Consider the benefits of cashback offers and fee structures when selecting mortgage products.

Supporting landlords with compliance and portfolio management

Membership of The Landlord Association (TLA) offers practical support for landlords navigating these mortgage changes and regulatory requirements. TLA provides access to compliance resources, guidance on energy efficiency standards, and tools to organise property records and tenancy documentation. The association’s new property management platform, ORBIT, currently in BETA testing, is designed to help landlords and letting agents manage portfolios, track compliance actions, and maintain essential records in one place. ORBIT’s features include document storage and a property management AI assistant, which can assist in preparing for new obligations and monitoring regulatory developments.

Exploring TLA membership can provide landlords with the information and resources needed to align mortgage decisions with compliance and operational needs. Access to member support and ORBIT BETA access helps landlords stay organised and informed as the buy-to-let market and its regulatory framework continue to evolve.

Landlords should continue to monitor lender announcements and government guidance to ensure borrowing strategies remain aligned with market conditions and legal requirements.

Sources: Landlord Today