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Bad News - Lenders speed up passing on interest rate rises to landlords

An online specialist mortgage broker claims that lenders are getting quicker at passing in interest rate rises to landlords.

Property Master says that compared with December last year, before the recent three increases in the base rate, landlords will now be paying up to £90 more per month including fees, for a typical two-year fixed rate mortgage of £160,000.

Angus Stewart, chief executive of Property Master, says: “As anticipated there have been widespread increases in the cost of fixed rate buy-to-let mortgages as lenders have been quicker this time around to pass on the latest increase in the base rate.  Interestingly, mortgage costs have risen at a slower rate for landlords borrowing through a limited company, but these mortgages are often more expensive in any case and there are fewer lenders to choose from.”


He says that the rate for a typical buy to let Standard Variable Rate mortgage now stands at an average of 5.06 per cent. Repayments for a typical SVR landlord mortgage of £160,000 are now at £632 per month, in some instances almost £300 per month more than the cheapest fixed rate buy-to-let mortgages.  

Landlords still on SVRs that expect to maintain their property for at least two years should certainly look for a better fixed rate deal, he advises.  With further rate rises expected even landlords on a current fixed rate with a limited time left  might want to consider a new deal  even if it would mean paying an early redemption fee to exit their existing loan.

Stewart continues: “Higher mortgage costs coupled with the scarcity of property is making it difficult for landlords who want to expand their portfolio.  This is not good news given the current high demand for accommodation and the rise in rents that is happening as a result.”

The cheapest typical buy to let mortgage is for a two-year fixed rate mortgage, for £160,000 with a Loan To Value of 60 per cent, moved up from 2.06 to 2.36 per cent, an increase in monthly cost from £311 to £351 or £40 per month more, once fees are included. 

The increase was less for the more popular five-year fixed rate mortgages.  A typical five-year fixed rate buy to let mortgage with an LTV of 60 per cent again for £160,000 increased from 2.23 to 2.48 per cent - an increase in monthly cost from £311 to £346 or £35 per month more once fees are included.

Property Master calculates its data from some 30 lenders who constitute around 75 per cent of total buy to let mortgage lending. 

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    Why is it assumed that all landlords are mortgaged up to the eye brows, most of us are not


    I agree Andrew, but no doubt Shelter, Acorn etc. will be riding to the rescue to support those landlords affected most by interest rate rises!


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