Rising interest rates alone could add more than £1,000 a year to mortgage repayments.
Landlords must brace themselves to face higher costs as ongoing volatility and rules changes in the private rented sector could add thousands of pounds to their outgoings, latest analysis by Moneyfactscompare.co.uk revealed.
As witnessed in the residential mortgage market, the uncertainty caused by conflict in the Middle East has led lenders to pull more than 1,300 buy-to-let (BTL) deals from sale since the start of March. Furthermore, it has also seen interest rates rise sharply; the average rate charged by a two-year fixed BTL mortgage jumped from 4.66% at the beginning of the month to 5.40% today, while the average five-year fixed BTL mortgage rate went from 5.05% to 5.72% over the same timeframe.
“Soaring borrowing costs will cause pain to landlords, as they join millions of consumers facing higher mortgage repayments,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk. She explained that landlords currently looking to take out a typical two-year fixed mortgage can expect to pay around £1,100 more a year compared to the start of the month (based on a £250,000 loan repaid over 25 years).
“This is terrible news, as rising costs could lead to higher rental payments for tenants, or a drop in the pool of properties available for rent if landlords decide enough is enough and sell off their portfolio,” Springall continued.