Nearly half a million landlords face higher costs or even making a loss between 2023 and 2024 as their fixed rate mortgages mature.
Industry body UK Finance reports that of about 1.3 million BTL mortgages on fixed rates at the end of June, about 220,000 were set to expire over the 12 months to June 2023, and a further 250,0000 over the following 12 months.
These landlords face higher costs and will have to refinance at much higher rates and face rising monthly repayments, in some cases by more than 120%, pushing them into the red, it is claimed.
The Bank of England’s 0.5% interest rate hike to 3.5%, its ninth consecutive rise as it battles inflation, means that landlords on variable rate deals will see their costs increase slowly, in line with the Bank Rate increases, but as about 85% of buy-to-let mortgages are interest-only, these will be hit harder by higher rates.
Double
A landlord with a two-year fixed-rate mortgage expiring now will see their mortgage rate more than double from 2.89% to 6.34%, based on the average buy-to-let rates tracked by Moneyfacts, according to The Telegraph.
For a landlord with a £150,000 loan, their interest payments will soar from £361 per month to £793 – a 120% rise – while a landlord at the end of a five-year fix would face an increase in monthly interest payments from £436 to £781 – a 79% jump.
UK Finance doesn’t paint a very positive picture in its mortgage market forecast ;for 2023, with the number of property transactions expected to fall 21% to 1 million, and the value of lending to landlords down 27%.