Buy-to-let landlords are facing a tougher time securing finance due to a significant reduction in product choice and rising mortgage rates, it has emerged.
The debate around rising mortgage rates has so far been centred around the strife facing homeowners and families, but it’s also had an impact on buy-to-let landlords, to the detriment of renters nationwide.
New analysis shared with City A.M. this morning shows that the number of buy-to-let mortgage products on offer has fallen by -51.1 per cent in the past year, down from 3,264 in November 2021, to 1,595 in November 2022.
Adding to the trouble is the fact that the average rate being offered on all buy-to-let products has increased by 2.1 per cent in the past year to currently sit at an average of 3.09 per cent, according to the latest mortgage market analysis by property lender Octane Capital.
As a result, the average monthly repayment for landlords has climbed from £656 to £917; an increase of 39.7 per cent.
With interest-only mortgages, the average monthly payment has increased by a remarkable 242.8 per cent to a high of £493 per month.
Five-year fixed mortgages
Looking specifically at five-year fixed mortgages, rates have climbed from 1.39 per cent to 4.89 per cent.
This means the average monthly full payment has increased by 60.9 per cent while interest-only payments are up 286.4 per cent.
“The reduction in product choice for buy-to-let mortgages has been influenced largely by a consistent string of Bank of England interest rate hikes which has led to many lenders pulling their buy-to-let range,” explained the CEO of Octane Capital, Jonathan Samuels, to City A.M. this morning.
“However, with stability gradually returning to the market, we fully expect 2023 to bring with it a far more settled market for landlords and buy-to-let investors,” Samuels stressed.