A number of lenders have now passed on the recent interest rate hike to mortgage customers, which means that borrowers, including buy-to-let landlords, will see their bank’s standard variable rate (SVR) increase.
Since the Bank of England hiked the base rate to 0.75% in August, most lenders have made plans to increase not just their SVR, but also their buy-to-let mortgage rates, according to fresh research by Property Master.
By using algorithms to match the requirements of individual private landlords against the entire buy-to-let mortgage market, the online mortgage broker reports that average standard variable rates for buy-to-let mortgages saw the biggest month-on-month increase with the cost of an interest-only loan of £150,000 jumping from £603 per month to £620 per month.
For average five-year fixed rates loans, increasingly popular with private landlords in light of increasing interest rates, the cost of a similar loan rose from £348 per month to £350 per month if the customer was looking to borrow 65% of the value of the property, and from £423 per month to £425 per month if 75% of the property’s value was required.
The news comes as the Monetary Policy Committee prepares to meet again today.
Angus Stewart, Property Master’s chief executive, said: “The move by the Bank of England to normalise borrowing rates following the last market crash seems to be truly underway and it is beginning to feed through to buy-to-let mortgage rates which up and until now have been relatively stable.
“The MPC meets again [today] but market commentators are not yet expecting another rate rise quite so soon.”
Private landlords, especially those on standard variable rates that have seen a big jump in cost month-on-month, should really be carefully evaluating their finance requirements, according to Stewart.
He added: “Whilst increased competition has helped to keep costs down to some extent the trend is now upwards and we would expect keenly priced fixed rates to be snapped up.”