Buy-to-let rent growth

Buy-to-let mortgage rates start their upward trend after base rate rise

While landlords have felt the squeeze over the past year or so, mortgage rates have remained fairly competitive enabling them to access and secure low rate deals.

Despite low interest rates working in landlords’ and buy-to-let investors’ favour in recent times, the market looks like it is slowly starting to react following the Bank of England’s move to normalise borrowing rates.

Research by Property Master indicates that the 0.25% base rate rise is starting to have an impact on buy-to-let mortgages. The average standard variable rate for a buy-to-let mortgage has seen the biggest month-to-month increase, with the cost of an interest-only mortgage of £150,000 jumping from £603 to £650 per month.

Popular five-year fixes show an increase too

Five-year fixed rates have been increasingly popular with landlords with a long-term investment strategy, and these too are showing the impact of the rate rise with monthly repayments increasing albeit slightly.

The cost of an average five-year fixed rate loan for a customer looking to borrow 65% of the value of the property has increased from £348 per month to £350. Likewise, for a customer seeking 75% of the value of the property, there has been an increase from £423 per month to £425.

Landlords have benefited from relatively stable market rates in recent months, but this slight increase in mortgage rates is the first sign that the trend is likely to continue upwards. Those sitting on a standard variable rate will have now seen a big jump in their monthly repayments, and many will be reevaluating their financial requirements. Lenders are anticipating high demand for the few keenly priced fixed-rate mortgages still available, and borrowers are encouraged to secure a new deal before today’s low rates disappear.

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