After some initial delay the two recent increases in the Bank of England base rate have now fed through and are leading to big increases in the cost of buy-to-let fixed rate mortgages, broker Property Master has warned.
The cost of 2-year fixes saw the biggest movement with the average rate increasing by up to 0.3% adding typically an additional £40 to the monthly cost once fees are included, according to the online buy-to-let mortgage broker.
Its latest Buy-to-let Mortgage Tracker found that, as can be expected, the biggest increase was in the cost of a buy-to-let Standard Variable Rate (SVR) mortgage which now stands at an average of 4.99%, an increase of 0.25% since the Bank of England begun increasing the base rate last December, adding £31 to the monthly cost. This is for a typical landlord loan of £160,000.
Angus Stewart, chief executive of Property Master, said: “Our team have had one of the busiest week’s ever making sure our search systems are up to speed with all the recent activity in this marketplace.
“Whole product ranges have been withdrawn and then relaunched by several lenders, but the outcome has usually been to increase the cost to landlords.
“We are now in a rising interest rate environment and most commentators expect another rate rise next week when the Bank of England meets again on Thursday, March 17th.
“With inflation continuing to increase, exacerbated by global events, we foresee additional base rate increases over recent months.
“We can already see lenders preparing to raise rates again so tightening the squeeze still further on consumers and landlords alike.”
The cheapest typical buy-to-let mortgage is for a 2-year fixed rate mortgage, for £160,000 with a loan-to-value (LTV) of 60%, which moved up from 1.76% to 2.06%, an increase in monthly cost from £271 to £311 once fees are included.
The increase was less for the more popular 5-year fixed rate mortgages. A typical 5-year fixed rate buy-to-let mortgage with an LTV of 60% again for £160,000 increased from 1.98% to 2.23% up 0.25% or £33 per month.
The Property Master Buy-to-let Mortgage Tracker follows some 30 lenders who constitute around 75% of total buy-to-let mortgage lending. It reports its findings every month.
As well as typical two and 5-year fixed rate buy-to-let mortgages the Tracker also tracks the cost of buy-to-let mortgages taken out by landlords through a limited company as opposed to those taken out by private individual landlords and the cost of HMO (House in Multiple Occupation) mortgages and those mortgages taken out by landlords buying holiday lets.
