Mortgage rates have risen sharply in recent weeks, pushing a growing share of buy‑to‑let borrowing above 5% and materially increasing costs for landlords.
Analysis by the Hamptons lettings agency
shows that the average mortgage rate secured by a landlord in April has risen to 4.84%, up from 4.20% in January.
So far this month, the average landlord taking out a two-year fixed-rate product secured a rate of 4.73% (+0.63% since January) with the average investor opting for a five-year fix paid 4.94% (+0.74%).
As a result, by early April, 43% of all new buy-to-let lending was agreed at a rate of 5% or above, up from just 8% in January and back to levels last seen in December 2023.
This has materially increased borrowing costs for landlords.
Landlords rolling off two-year fixed-rate deals in April saw monthly mortgage payments rise by 3.4%.
Meanwhile, those reaching the end of cheaper five-year deals taken out in 2021 have seen payments rise by 28.5%.
Since most buy‑to‑let borrowing is interest‑only, monthly payments rise sharply when rates increase.
A move from 2.0% to 4.0% would double payments on an interest‑only mortgage, compared with a 29% rise on a repayment loan.
On a typical £150,000 mortgage, that equates to a £250 a month increase on an interest-only basis, versus £162 on a repayment deal.
As a result, landlords have responded by increasing their use of interest‑only mortgages, paying down debt when remortgaging, and moving towards cheaper short‑term mortgage products.
So far this month, more than three-quarters (78.4%) of lending on new buy-to-let purchases has been on an interest-only basis.
This is the highest level since October 2022, when interest rates last peaked, and up from 71.1% in January 2026.
However, the share of landlords remortgaging onto interest-only deals has remained broadly flat.
At higher interest rates, the shift to interest-only borrowing lowers monthly payments, but without reducing the total amount owed.
This allows landlords to maintain cash flow and pass lender stress tests.
On a typical landlord purchase during April 2026, a repayment mortgage cost an average of £828 a month, compared to £580 on an interest-only deal – a £258 a month difference.
In cash terms, this is the largest gap since September 2022, when mortgage rates spiked.
Aneisha Beveridge, Head of Research at Hamptons, says: “Rising mortgage rates are once again shaping landlord behaviour, as many look for ways to manage higher borrowing costs.
“The last time interest rates rose sharply back in 2022, they unleashed record rental growth.
“Landlords were able to pass higher mortgage costs on to tenants as would-be buyers increasingly chose to rent until rates began falling back, stoking demand for rental homes.
“In effect, three or four years of typical rental growth were squeezed into the space of 12 months.
“While rents fell last year, early signs suggest the pace of rental growth is beginning to pick up as tenant demand rebounds and mortgage rates rise.
“The falls recorded in 2025 have already been wiped out, while the 24% annual increase in tenants starting the search for a new home in March was the largest since our records began.”
