Landlords have seen the cost of their monthly buy-to-let mortgage interest payments on an average UK home jump by 75.7% over the last year, analysis from Octane Capital shows.
The average BTL investor has borrowed £217,364 after placing a 25% deposit on the current average property price of £289,819, says the specialist lender.
The average interest-only monthly repayment – the class of mortgage generally used by landlords — has climbed to £964 per month, an annual increase of 75.7%, or £415 per month.
However, if investors choose to make full monthly repayments, a current average buy-to-let mortgage rate of 5.32%, would amount a £1,312 charge.
The survey pinots out that the average mortgage rate has increased by 2.12% in the last year, meaning that the average monthly cost of a full mortgage repayment has increased by 31.6%, adding £315 to the cost of BTL borrowing.
Despite this increased cost, investor appetites for buy-to-let investment “remains strong”, says the lender, with its previous research showing that the total value of loans issued to BTL investors has lifted by 12% over the last year.
Octane Capital chief executive Jonathan Samuels says: “It’s not just residential buyers that will have shuddered at the news of an eleventh consecutive interest rate hike last week [to 4.25% from 4%], with BTL investors also seeing the cost of borrowing climb substantially.
“These increased mortgage costs will further reduce a profit margin that has already been dented due to numerous government legislative changes in recent years.
“Despite this, we’ve actually seen an increase in the total value of BTL loans issued in the last year which suggests that, despite all that’s been thrown at them, the nation’s landlords are still largely undeterred and the BTL sector itself remains a lucrative one for those looking to invest in the right areas and with the right financing in place.”
