According to Property Master’s tracker, which follows 30 lenders who comprise 75 per cent of total buy-to-let mortgage lending, the average price of a two-year fixed rate buy-to-let product at 60 per cent loan to value (LTV) in January was 1.69 per cent.
The rate for this kind of product is now 3.42 per cent, meaning monthly costs including fees have increased from £262 to £494.
For an average five-year fixed rate loan at the same LTV, the price in January was 1.94 per cent and now stands at 3.5 per cent. Consequently, monthly costs including fees have risen from £273 in January to £408 in August.
Angus Stewart, chief executive of Property Master, said: “The cost of buy-to-let mortgages continues to rise inexorably. Obviously much of this reflects the Bank of England’s decision to hike interest rates for the sixth time earlier on this month but there are other factors at play too.
“We are seeing reduced competition in the buy-to-let mortgage market caused by a combination of factors with some lenders using higher rates to manage customer demand whilst others are taking the opportunity to widen their margins.”
He added that the sector has seen increased regulation and higher costs, which has led to an increased “professionalisation” of the private rented sector, so there would be fewer but larger landlords.
Stewart continued: “For many of the smaller players in this market, unaffordable rises in mortgage costs will undoubtedly lead them to conclude buy-to-let no longer works for them. Indeed, the latest figures from HMRC show a dramatic increase in takings from Capital Gains Tax suggesting many landlords are deciding this is the moment to sell-up.”
