The price of some buy to let mortgages looks set to rise across the board following the decisions of two of the biggest providers – Barclays and NatWest – to pass on increases in their costs.
A Barclays statement says: “The cost of funds have steadily increased over recent weeks and as a result, we have seen a number of our competitors increase their rates.”
Two major sources of funding for lenders have stopped in recent weeks, prompting the lenders’ increases.
The Funding for Lending Scheme, introduced during the 2012 credit crunch, came to an end on January 31; and the Bank of England closed its £140bn Term Funding Scheme at the end of February.
Funding for Lending was particularly important; it allowed banks borrow funds from the Bank of England cheaply, so that they in turn could lend it out to bolster the wider economy – seen as crucial at the time of its introduction.
The Term Funding Scheme was introduced by the Bank of England in 2016 as one of a series of measures designed to keep the economy stable after the Brexit vote. Again, this provided banks with cheap funding to ensure borrowing costs remain low.
Earlier this week NatWest increased its rates on selected fixed-rate deals including on its buy to let mortgage range.
