Repayments on a typical buy-to-let (BTL) mortgage have already increased by over £100 this year, before last week’s rise in interest rate is taken into account.
Figures from online BTL broker Property Master says this this buy-to-let mortgage tracker shows there has been a “relentless climb” in the cost of BTL mortgages, with repayments on a typically £160,000 two-year fixed rate BTL loan (at 60% LTV) increasing by £103 since January.
Property Master chief executive Angus Stewart says this BTLt mortgage tracker shows the “relentless climb” in the cost of these mortgages. “This increase was before the Bank of England increased the base rate for the fourth time in a row.
“The current turbulence in the money markets is also making it more difficult for some lenders to raise funds, so there is a fear that as well as higher mortgage costs landlords may also face reduced choice. We are recommending to our clients that if they need to remortgage or are planning a new purchase, they should bear in mind mortgage rates are changing and products are being withdrawn on a more or less daily basis.”
Stewart adds that BTL mortgage costs may look low from an historical point of view, but he points out that these increases come as landlords face the burden of increased property taxes and regulatory costs.
He says: “Now increased borrowing costs are making margins slimmer still exacerbated by the government removing mortgage interest relief which had less impact when the base rate was lower.
“With accommodation in short supply and rents on the rise it will be worrying to see landlords deciding that the private rented sector is no longer for them.”
The Property Master BTL Mortgage Tracker follows around 30 lenders, which constitute around 75% of the total market in this area.
It found the cheapest two-year £160,000 BTL mortgage at 60% LTV had moved up from 2.36% to 2.46% over this period. This equates to an increase in monthly cost from £351 to £365 or £14 per month more, once fees are included.
The increase was slightly less for the more popular five-year fixed rate mortgages. A typical five-year fixed rate BTL mortgage has increased from 2.48% to 2.58% – an increase in monthly costs from £346 to £359 or £13 per month more once fees are included.
