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Buy-to-let landlords head for remortgage crisis as rates keep soaring

By Melissa Lawford

ALMOST a quarter of a million buy-tolet landlords face a remortgage crisis over the next 12 months as the cost of borrowing soars.

Lenders have pulled 421 buy-to-let mortgage deals in two weeks as they rapidly reprice deals after large jumps in future interest rate expectations, according to data from Moneyfacts.

Average rates on buy-to-let loans have jumped by 0.45 percentage points in just 11 days, with the cost of a typical two-year fix now at 5.9pc.

It means that a landlord taking out an average £150,000 loan will have to pay an extra £675 per year in interest compared with if they had taken out a loan less than two weeks earlier.

Hundreds of thousands of landlords coming to the end of fixed-rate deals face much higher leaps in their annual repayment costs as they refinance at double the rates they are used to.

An investor who took out a loan in

June 2021 was able to fix at 2.96pc. If they were to remortgage a £150,000 loan today based on the average quoted rate, they would have to pay an extra £4,410 per year in interest compared with their old deal.

There are 231,816 buy-to-let mortgages on fixed rates due to expire in less than a year, according to UK Finance, the lender body.

Angus Stewart, chief executive of Property Master, a buy-to-let mortgage broker, said: “Our team cannot believe the rate of product churn.

“Increases of 0.5 to 0.75 percentage points are the norm. Some lenders have made two changes in the past week. Clearly this is going to put even greater pressure on landlords.”

Adam Kingswood, of Kingswood Residential Investment Management, a buy-to-let specialist in Nottingham, said the tight rental market means landlords have so far been able to offset jumps in their mortgage bills by raising rents.

However, many are now hitting the limit of what tenants will reasonably pay, forcing landlords to bear the higher costs. “We have been having conversations with tenants saying: the landlord’s mortgage has gone up by £300 per month. If you can’t afford a rent increase, the landlord will probably sell up,” said Mr Kingswood.

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2023-06-03T07:00:00.0000000Z

2023-06-03T07:00:00.0000000Z

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Daily Telegraph