Iranian conflict sees buy to let mortgage deals fall and rates rise

Landlords looking to refinance or arrange new buy to let borrowing are facing shrinking mortgage choice and higher rates as lenders respond to market volatility linked to the Iranian conflict.

Figures from Moneyfactscompare.co.uk, produced for Property118.com, show the number of buy to let mortgage products fell from 5,660 on 1 March to 5,081 by 12 March.

That represents a drop of 579 deals across fixed and variable mortgages in just under two weeks.

In several cases, lenders removed deals and then returned with replacements carrying revised pricing.

Others have yet to reappear.

However, with swap markets shifting rapidly, further withdrawals or repricing are possible while lenders reassess where borrowing costs should sit.

Rate blow for landlords

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, told Property118.com: “Several buy to let lenders have either withdrawn deals from their range or replaced them since the start of March, with inflated rates.

“As a result, product choice is down by almost 600 options and may well be hit further.

“This a blow to landlords who are hoping for rates to come down and who have already been enduring tax hikes, as well as regulation changes and rising costs.

She added: “The volatility in swap rates is being fuelled by the unrest in the Middle East, which has impacted gilt yields.

“As a result, lenders are acting more cautiously with their rate-setting for buy-to-let deals, similarly to how rates are being inflated in the residential mortgage market.”

BTL mortgage deals

Landlords who want new or BTL remortgage deals will find that rates have edged higher.

The average two-year buy to let mortgage rate increased from 4.66% on 1 March to 4.77% on 12 March, a rise of 0.11%.

Five-year rates moved more sharply, climbing from 5.05% to 5.19% over the same period, an increase of 0.14%.

These movements come amid wider disruption across mortgage markets after conflict involving Iran pushed oil prices higher.

Financial markets had previously anticipated a Bank of England rate reduction in the coming months – possibly next week, after good inflation news.

However, those expectations shifted once energy prices began rising, raising the prospect of stronger inflation pressure.

Act now for deals

Ms Springall said: “The path for interest rates can change quickly, only a few weeks ago economists were expecting interest rates to fall, but that outlook has changed.

“There is some hindsight that such unrest will be short-term, but it is too early to tell how long it will last, however, it is looking highly unlikely for a cut to the BBR next week, more likely a hold.

“We could start to see inflation move up again, threatened by rising oil prices, and that will mean less reason to cut BBR.”

She adds: “In the worst circumstances, we may get an increase to BBR before the year is over.

“Once stability returns, borrowers will get a better sense of where rates might rest in the coming weeks, but prolonged uncertainty will continue to hit borrowing costs, so acting fast to secure a deal is wise.”

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