Paragon Bank is showing some love for landlords on Valentine’s Day by offering its lowest rate on two-year fixes for new customers in more than 18 months.

Its products include a new 70% LTV two-year fixed rate starting at 3.94% for green A-C EPC-rated single self-contained properties, 3.99% for those at EPC D-E and 4.19% for HMOs and multi-unit blocks – all for portfolio landlords.

Linking landlord loans to EPCs like this has been growing as a trend and last year MPs called for it be accelerated.

But although Paragon believes there is still work needed to stabilise the economy, it says things seem to be heading in the right direction and the general feeling is that rates are coming down. Commercial director Louisa Sedgwick adds: “This means that we’re seeing landlords seek the stability of a fixed rate but over the shorter two-year term so they can reassess the market in a couple of years’ time.”

Base rate

The next base rate announcement is on 21st March, but it’s not expected to drop until May or June when lenders could then reduce their mortgage rates further. Although average buy-to-let fixed-rate mortgage rates are now down to 5.5% from 6.79% last August, they are still far higher than the 3.06% seen in February 2022.

Mortgage Finance Brokers’ MD, Gavin Richardson (pictureds), says while Paragon’s offer is great news and will no doubt generate interest and activity - especially as it’s unlikely to be around for long - it’s essential that borrowers speak to a broker and calculate the total cost of borrowing for the initial mortgage period.

“Although the headline rates look great, these may not always be the cheapest deals overall once you add the fees,” he tells LandlordZONE.