Landlords renewing their mortgage are expecting a £615 rise

Landlords renewing their mortgage are expecting a £615 rise

0:07 AM, 14th March 2024, About 4 months ago

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Nearly half of UK landlords with mortgages are preparing for a rate renewal within the next year – and they are expecting their mortgage to rise by a whopping £615, on average.

The research from The Mortgage Lender (TML) shows that another 41% of landlords will be renewing in the next two to three years.

Most of these landlords are currently locked into a five-year fixed mortgage, while others have two-year fixed deals.

TML says that a smaller percentage have Standard Variable Rate (SVR) or tracker mortgages.

‘Grappling with high inflation’

The lender’s head of sales in the Midlands and South, said: “The Bank of England has been grappling with high inflation for well over a year now, introducing successive rate rises to drive it down to more manageable levels.

“Although they have had some success in achieving this, there is still a way to go. A rate cut could happen this year, though possibly not until the summer.”

He added: “With many due to remortgage this year, it’s important landlords speak to a broker to find the most suitable mortgage for them in order to maintain their property portfolios, particularly as costs of living challenges continue.”

Landlords renewing will be seeing higher payments

Despite recent drops, mortgage rates remain higher than they’ve been for most of the past decade which means landlords renewing will be seeing higher payments.

The Bank of England’s base rate is currently 5.25%, and while the market predicts a gradual reduction in the rate from the Monetary Policy Committee (MPC), this might not happen until late summer.

Until then, borrowers will need to make decisions about their mortgage deals, TML says.

Landlords who are due to renew say that, on average, their monthly payments will rise by £615.

To cope with these increased costs, some landlords plan to raise rents, while others have already budgeted for an increase.

Some landlords are also considering selling their properties, converting them into Houses in Multiple Occupation (HMOs) for better returns, or even transitioning to holiday lets.

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