Buy-to-let mortgage payments increase by 286% in one year

The latest mortgage market analysis by specialist property lending experts, Octane Capital, reveals that buy-to-let landlords are facing a tougher time securing finance due to a significant reduction in product choice and rising mortgage rates.

The debate around rising mortgage rates has so far been centred around the strife facing homeowners and families, but it’s also had an impact on buy-to-let landlords, to the detriment of renters nationwide.

Octane Capital’s analysis shows that the number of buy-to-let mortgage products on offer has fallen by -51.1% in the past year, down from 3,264 in November 2021, to 1,595 in November 2022.

Adding to the trouble is the fact that the average rate being offered on all buy-to-let products has increased by 2.1% in the past year to currently sit at an average of 3.09%.

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.

Looking specifically at five-year fixed mortgages, 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%.

CEO of Octane Capital, Jonathan Samuels, commented: “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.

“At Octane Capital, 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.”