According to Moneyfacts, the average two-year buy-to-let fixed rate as of today is 4.87 per cent, and five-year fixed rate is 5.44 per cent.
This compares to 2.9 per cent for an average two-year fixed rate and 3.18 per cent for a five-year fixed rate in December last year.
Moneyfacts figures also show that the total number of buy-to-let mortgage products has fallen by 359 products since yesterday to 862 currently.
Between Tuesday and Wednesday, Moneyfacts said that it had seen its biggest daily fall in products since it started recording this data in 2011, with product count decreasing by 507 to 1,221.
Products being removed and stress tests increasing
Angus Stewart, chief executive of online buy-to-let broker Property Master, agreed that buy-to-let mortgage products were being “removed from the market at an unparalleled level”, and that newer entrants to the market had withdrawn as they had been unable to source usual funds from institutional lenders.
“This is extremely worrying for the sector. We face reduced choice in the buy-to-let market which will in turn have a further impact on the rising cost of mortgages,” he added.
Gindy Mathoon, mortgage and protection advisor at Create Finance, said that lenders were repricing fixed rate furiously to keep in line with swap rate movement and buy-to-let mortgages were “not as attractive as they were three to four weeks ago”.
He said that lenders had started to change their affordability stress test, noting that this was “inevitable”.
Mathoon said a mainstream lender had increase two and five-year fixed stress rate to 7.5 per cent at 140 per cent of the mortgage interest amount, which he said that most mortgages at higher loan to value tiers became unaffordable.
He noted that typical stress tests ranged between 4.5 and 5.5 per cent, and if they continued to go up then the buy-to-let market could slow down.
Secure fixed rate deals when they come back
Stewart said that the advised landlords to secure fixed rate mortgages when they became available again as further base rate rises were expected in the coming months.
He said that lenders were unlikely to do this until financial markets stabilise but as the base rate was predicted to rise to six per cent in the next year landlords should “act sooner rather than later”.
He added that it expected criteria to tighten as well given market and economic conditions.
Stewart said that Property Master provided the latest buy-to-let mortgage deals and it assess these again lender criteria and affordability checks.
Mathoon said that due to unpredictability it had asked some landlords to “consider holding fire on knee jerk reacting to the market by applying for a fixed rate mortgage”.
He added that lower rates could be found in variable and discount products, and it had seen an uptick in the last three to four weeks.
“Clients need to understand the risks attached to this type of rate however they offer a lower payments currently than fixed rates,” Mathoon warned.
