Increases on the way

Small recorded rises in mortgage rates for landlords herald a long-term increase in the cost of finance, loan experts have warned. As all will know the Bank of England increased the base rate with a “mild” warning of more to come.

Data released, show that the average rates for two-year and five-year fixed buy-to-let mortgages rose this month for the first time in close to a year.

And while the average rise is small - 0.05% for a two-year fixed deal - many say it sets the direction for a prolonged increase. Quote, “It’s rather like an iceberg. This rise is the part you can see above the water line, but underneath there’s a lot more damage going on”.

The trend is upwards and now is the time to get on the fixed rate ship before it leaves the harbour.

The Bank Rate is starting to move and the risk is it becomes an escalator and it moves again in February and then it moves again and again. It would seem sound advice for any landlord to review their current mortgage deal sooner rather than later.

The average two-year fixed rate increased from 2.79% last month to 2.84% today. The average rate has been falling, with this change signalling the first rise since February. The average rate for a five-year fix rose by 0.1% points to 3.44%

It has been a turbulent time for the buy-to-let market thanks to multiple rule changes, and there’s no sign of calmer waters as rates are starting to creep up from their record lows.

Any rise in mortgage rates for landlords will exacerbate the changes to tax relief currently putting a squeeze on their profits.

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