Stability in Buy-to-Let Mortgage Rates could be about to End

The current stability in buy-to-let mortgage rates could be about to end, according to the latest Mortgage Tracker from Property Master.

The online mortgage broker found that the cost of a fixed rate buy-to-let mortgage varied by as little as £1-£2 per month either up or down in May on the previous month. 

Property Master warns that this stability may be about to change, given a recent Inflation Report from the Bank of England (BoE), which signalled that interest rates would rise quicker than expected, on the back of wage growth, falling unemployment and stronger GDP.

Angus Stewart, the Chief Executive of Property Master, says: “We have been tracking the cost of buy-to-let fixed rate mortgages for almost 18 months now, so have a large database. There have only been two movements in base rate over that period – the last one of which was in August 2018 – so we have seen a lengthy period of stability.

“But the Governor of the BoE signalled clearly last week that we should prepare for this stability to end much quicker than was expected, on the back of positive news around wages, unemployment and stronger GDP.”

He continues: “Stable base rates and increased competition in the lending market has helped to keep rates down in the buy-to-let market, but last week’s news means it really is time for landlords to start re-thinking their finances.” 

The May 2019 Mortgage Tracker shows that the average cost of a five-year fixed rate buy-to-let mortgage on 50% loan-to-value (LTV) was unchanged between April and May. At 65% LTV, a five-year fixed rate deal increased in price by £2 per month on a monthly basis. However, at 75%, the cost was down by £2 per month. 

A similar picture emerged for two-year fixed rate deals, with the cost remaining the same or going down by £1-£2 per month.

Since the start of the year, the cost of most categories of fixed rate buy-to-let mortgages has varied by no more than £7 per month, either up or down. The exceptions were two and five-year fixed rate deals for 50% LTV, which saw annual growth in the monthly cost of £18 and £25 respectively.

Property Master’s Mortgage Tracker follows a range of buy-to-let mortgages for an interest-only loan of £150,000.