What’s happening to the Buy to Let mortgage market?

Volatility in the wholesale markets, caused by the conflict in the Middle East, has triggered Buy to Let mortgage lenders to respond rapidly to the movements in Swap rates.

Swap rates are rates based on what markets think interest rates will be in the future. If Swap rates go up, mortgage lenders look to increase their rates and vice versa.

Lenders are currently withdrawing products with little or no notice due to the current volatility.

If there is a rapid de-escalation in the Middle East conflict, we can expect an improvement in mortgage rates. If there is prolonged but contained conflict, then rates might remain similar to today. However, a severe escalation is likely to result in higher mortgage rates.

Who knows which is the most likely scenario?

Borrowers should act now, before any more rate hikes.

The good news is that by submitting a Buy to Let mortgage application now, borrowers can be protected from further rate increases, and they are not locked into the higher pricing if lenders reduce rates after an application has been submitted.

The customer can move to the lower rate while still preserving their outstanding application.

There is also a growing gap opening up between lenders, with some repricing far more aggressively than others, depending on their funding lines and appetite for new business. This means two lenders can be offering materially different rates on the same day, even for identical borrowers.

In practical terms, that makes timing and advice more important than ever. Waiting even a few days in the current market can mean the difference between securing a product and missing it altogether.

This is not a “wait and see” market. It is a “secure and review” market.

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