Average buy-to-let mortgage rates for some typical 2-year fixed rate deals favoured by landlords have doubled since the start of the year, according to Property Master’s latest Mortgage Tracker.
The research found that the average rate for a typical £160,000 buy-to-let mortgage fixed for 2-years at a loan-to-value (LTV) of 60% has more than doubled since the start of this year – from 1.69% in January to 3.43% in August.
This took the monthly cost including fees from £262 to £494, an increase of £232. The same mortgage fixed for 5-years had also increased dramatically from 1.94% in January to 3.5% in August an increase in monthly cost including fees from £273 in January to £481 in August, up £208.
Angus Stewart, chief executive of Property Master, said: “The cost of buy-to-let mortgages continues to rise inexorably.
“Obviously much of this reflects the Bank of England’s decision to hike interest rates for the sixth time earlier on this month but there are other factors at play too.
“We are seeing reduced competition in the buy-to-let mortgage market caused by a combination of factors with some lenders using higher rates to manage customer demand whilst others are taking the opportunity to widen their margins.
“We have said for some years that increased regulation and higher costs were leading to the professionalisation of the private rented sector.
“In reality this will mean fewer but larger landlords. For many of the smaller players in this market unaffordable rises in mortgage costs will undoubtedly lead them to conclude buy-to-let no longer works for them.
“Indeed, the latest figures from HMRC show a dramatic increase in takings from Capital Gains Tax suggesting many landlords are deciding this is the moment to sell-up.”
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.
