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Higher mortgage costs are the latest blow to buy to let sector

A leading independent mortgage market monitor is warning that increases in mortgage costs are now proving the latest blow to the beleaguered buy to let sector. 

Since the start of this month the average two-year fixed rate has increased by 0.05 per cent. 

“It has been a turbulent time for the buy to let market thanks to multiple rule changes. While a 0.05 per cent increase appears insignificant, it marks a turnaround in the buy to let sector, so landlords are now faced with not only more hoops to jump through but higher rates as well” cautions Charlotte Nelson, finance expert at Moneyfacts. 


“As in the residential mortgage market, much of the rise in buy to let rates can be attributed to base rate speculation causing SWAP rates to increase significantly. This has given lenders little choice but to increase their mortgage rates, with 18 individual providers so far having upped theirs since the start of September” she says. 

Nelson says that tighter restrictions imposed since the start of this month on portfolio landlords - where lenders are now required to apply stricter underwriting criteria to landlords with four or more investment properties - has seen the buy to let mortgage market shift away from landlords who have three or fewer properties.

There has been a 13 per cent drop in the number of products available to this group since the start of October, she says.

“This portfolio change may have had a more practical effect on rates as well, with lenders not just being a little more cautious; some lenders may have had to change their process behind the scenes to accommodate the new rules, and this extra cost may be impacting these providers’ pricing activity” she adds.

“With all the changes and now the rising buy to let rates, it is going to be more difficult for individual landlords to make a profit that is worth their efforts. Landlords will have to weigh up the costs to figure out what their best possible option may now be. Anyone who is unsure should seek the advice of a financial adviser.”


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