New research from an online buy to let mortgage broker shows that average rates for some typical deals favoured by landlords have doubled since the start of the year.

Property Master’s Mortgage Tracker reveals the average rate for a typical £160,000 buy to let mortgage fixed for two years for a Loan to Value of 60 per cent had more than doubled since the start of this year, from 1.69 in January to 3.43 per cent this month.  

This took the monthly cost including fees from £262 to £494, an increase of £232. 

The same mortgage fixed for five years had also increased dramatically from 1.94 per cent in January to 3.5 per cent in August an increase in monthly cost including fees from £273 in January to £481 in August, up £208. 

Property Master chief executive Angus Stewart says: “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.”

He continues: “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 broker’s mortgage tracker is based on some 30 lenders who constitute around 75 per cent of total buy to let mortgage lending. It 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 mortgages and those mortgages taken out by landlords buying holiday lets.