Buy-to-let landlords paying nearly 3x more

The cost of mortgage payments have surged by 283% since 2021 for landlords using interest-only, highlighting the dramatic effects of rising interest rates, Octane Capital research shows.

Buy-to-let mortgage rates have soared from an average of just 1.65% in October 2021 to 5.72% in October 2023.

As a result landlords making interest-only payments on their mortgage have seen costs climb from £272 per month to £1,042.

Jonathan Samuels, chief executive of Octane Capital, said: “It’s been a challenging year for the nation’s landlords, as mortgage repayments have dramatically eaten into their profit margins, margins that have already been reduced due to a string of legislative changes from the government in recent years.

“Those who opt to pay an interest only payment have seen a particularly large jump in the monthly cost of their mortgage and so it’s no wonder many landlords are dubious about their future in the sector and the profitability of their portfolio.

“One positive is that buy-to-let rates now seem to be on the slide, after increasing rapidly between 2021 and 2022. With the Bank of England holding the base rate since August, it seems that trend could continue as we move into 2024.”

Landlords paying off capital as well as the interest are now paying £1,371 per month, an increase of 71% versus October 2021, when they paid £804.

One silver lining for mortgage holders is the cost of two-year fixed rates have started coming down again, as they fell slightly from 5.87% to 5.72% between October 2022 and October 2023.

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