The majority of fixed rate buy to let mortgages are beginning to creep up in price, in a move that was widely anticipated after the Bank of England amended its growth forecasts.
Indeed, online broker Property Master suggests that the financial market had previously underestimated the potential for base rate increases but the Bank now appears to be positioning itself for that to take place. Its June 2019 Mortgage Tracker shows the monthly cost of five out of the six categories of fixed rate buy to let mortgages are rising.
The research shows that buy to let borrowers taking out a five year fixed rate mortgage for 50% of the property’s value would be paying £7 a month more in June than they would have done had they signed up in May.
The research also shows that five year buy to let mortgages worth 65% of the property’s overall value saw a month on month increase of £5, while the same fixed rate deals but for 75% of the property’s value fell by £1 - the only one of six categories to see a fall.
Additionally, according to the tracker, which follows a range of buy to let mortgages for an interest only loan of £150,000, the three categories which contained two year fixed rate buy to let mortgages all increased - one as much as £6 per month.
Figures were calculated on deals available on 01 June 2019 from 18 of some of the buy to let market’s biggest lenders, including Barclays, BM Solutions, RBS, The Mortgage Works, Godiva and Precise. Property Master’s chief executive Angus Stewart claims that not yet knowing who will succeed Theresa May as Prime Minister, as well as the ongoing Brexit uncertainty, are not helping matters.
‘There is some comfort for landlords facing increased rates in that competition amongst mortgage lenders for business has been fierce in recent years and that has fuelled the growth in the number of buy to let mortgage offerings to a 10 year high,’ he said.
‘There are an estimated more than 2,100 products to choose from but with lending criteria varying considerably between the operators landlords cannot assume that all of these possibilities are open to them,’ he added.
However, he pointed out that landlords in England already feel under pressure as a result of the new lettings fee ban and new deposit rules, so the increase in mortgage costs are being met with discontent in the current climate.