0:03 AM, 7th December 2022, About 2 months ago 4
Buy-to-let landlords are not only facing a tougher time securing finance with fewer mortgages and rising rates, but interest-only BTL mortgages have rocketed by 286.4%.
That’s according to specialist property lending experts, Octane Capital, who have analysed the mortgage market for landlords and how this impacts tenants.
The firm points out that news coverage of mortgage rates increasing has centred on the strife facing homeowners and families, not buy-to-let landlords – and why rents are rising for many tenants.
The analysis shows that the number of BTL mortgage products available has fallen by -51.1% in the past year, down from 3,264 in November 2021, to 1,595 in November 2022.
On top of that, landlords are also seeing the average rate being offered increasing by 2.1% in the past year to sit at an average of 3.09% today.
As a result, the average monthly repayment for landlords has climbed from £656 to £917; an increase of 39.7%.
With interest-only mortgages, the average monthly payment has increased by a remarkable 242.8% to a high of £493 per month.
And when five-year fixed mortgages are analysed, rates have climbed from 1.39% to 4.89%.
This means the average monthly full payment has increased by 60.9%, while interest-only payments are up 286.4%.
Jonathan Samuels, the CEO of Octane Capital, said: “The reduction in product choice for buy-to-let mortgages has been influenced largely by a consistent string of Bank of England interest rate hikes which has led to many lenders pulling their buy-to-let range.
“However, with stability gradually returning to the market, we fully expect 2023 to bring with it a far more settled market for landlords and buy-to-let investors.
“We have already set plans into motion with a view of increasing our buy-to-let offering in the new year and as a greater level of choice returns, the nation’s landlords will be able to better negotiate the landscape when borrowing.”