Buy-to-let interest rates on the up?

The cost of the average two-year fixed rate mortgage has risen since the start of October on the back of speculation that the Bank of England may hike the base rate.

A 0.05%-point increase since 1 October has taken the average two-year fix to 2.25% after 21 lenders upped their rates.

It comes after comments from Bank of England governor Mark Carney fuelled speculation of a base rate rise as early as November, pushing up the two-year swap rate from 0.54% to 0.82% in the space of a month. If this is to be the case landlords should review their current mortgage deal urgently as more increases will only hit profitability.

Skipton and Nationwide were among the first major lenders to raise their rates on 29th September, with Halifax following suit on 2nd October with increases of up to 0.2%.

Following the lender’s moves intermediaries should consider encouraging clients to lock into a fixed rate deal if they had not already done so.

Providers are now starting to factor swap rate rises into their pricing, causing the average two-year fixed rate to start creeping up, and this new trend is showing no signs of abating yet. 

Rates have sat at record lows, it is difficult for providers to swallow the increased cost by any means other than increasing the rates on offer. As a result, lenders are now treading a fine line between needing to remain competitive to protect their mortgage book and absorbing the cost of higher swap rates.

So, it most certainly looks like best advice is for landlords to review their current mortgage situation as soon as possible.

Help required.

If you would like to review your mortgage/s please make contact and one of our advisers will be happy to assist.