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BTL mortgage rates jump after Bank of England base rate hike

  • 04/12/2017
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BTL mortgage rates jump after Bank of England base rate hike
Buy-to-let mortgage rates have surged over the past month, following the Bank of England’s 0.25% increase to the base rate.

The average two-year tracker for a landlord has jumped from a record low of 2.23% in November to 2.43% in the weeks since policymakers upped core interest rates, according to Moneyfacts data.

Fixed rates have also gone up (although only slightly) with a typical two-year deal now at 2.93%, from 2.89% in November, the analysis showed.

Buy-to-let (BTL) rates had declined over 2017, but the recent rises mean trackers are now higher than December last year.

Two-year fixed rates were typically 3.01% 12 months ago, suggesting further increases could take place.


Lethal cocktail for buy-to-let

The increase to the base rate comes amid changes to borrowing criteria for landlords, creating increased pressure on the market, according to Charlotte Nelson from Moneyfacts.

She said: “The combination of the change in portfolio criteria lenders had to put in place earlier this year, rising Swap rates in the run-up to the announcement on 2 November and the base rate rise itself has proved a lethal cocktail for fixed rate BTL mortgages, with all this pressure leaving providers little choice but to review their range.

“The criteria changes for portfolio landlords and the rising fixed and variable tracker rates will start to eat into the returns of landlords, making many consider whether BTL is still the right option for them.

“With rates on the rise, it is important that BTL landlords weigh up their options carefully,” she added.

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