As the cost of borrowing will continue to rise over the next year, property investors are preparing to face even more struggles concerning their business. For many landlords approaching the time to remortgage, they are looking at remortgaging at rates that are double what they are currently paying. Learn more about the remortgaging woes facing landlords and what this could mean for property investment by reading on.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
According to data from Moneyfacts, after expectations that interest rates would soar, lenders pulled hundreds of mortgage deals to quickly reprice and benefit from the forecasted rate hikes.
Average buy-to-let rates have increased by .45 percentage points in just 11 days, making the new cost of a typical two-year fixed deal now 5.9%.
How will this affect landlords?
What this rapid increase means is that a landlord securing an average £150,000 loan will be set back an additional £675 per year in interest. This might not seem like a massive hit, but considering the fact that had they taken out a loan less than two weeks earlier, they wouldn’t have had to pay anything extra at all, it is quite shocking.
Many fixed-rate deals will be coming up on the end of their initial terms this year — over 200,000 buy-to-let mortgages included, according to UK Finance — and that means hundreds of thousands of landlords will be facing much higher annual repayment costs, many at double what they have been used to. This amounts to thousands of pounds over the life of the loan, a cost they will almost certainly pass on to tenants.
For those who find the extra expense to be the final straw, many landlords might opt to quit the industry completely, expediting an already existing exodus from the property investment space.
Get help for mortgage worries
If you’re concerned about how the recent interest rate changes will affect your property investments, be sure to get in touch with your adviser. We can help guide you toward the right choices to ensure your financial stability and prosperity. Get in contact today.