Buy to let mortgage rates rise after Labour’s Budget

Buy to let mortgage rates rise after Labour’s Budget

0:01 AM, 16th December 2024, About 11 hours ago

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Buy to let mortgage rates have increased following the controversial Autumn Budget – a sign that the markets are not impressed with Chancellor Rachel Reeves’ plans, research reveals.

An analysis by Octane Capital, comparing pre- and post-Budget November data for 75% LTV BTL mortgages, shows a 2.5% rise for full repayment mortgages, costing £951.

Interest-only mortgages have seen a 5.9% rise, with monthly costs rising to £498.

Despite the Bank of England’s base rate reduction to 4.75%, rising swap rates – influenced by concerns over the Budget’s fiscal measures – have driven up mortgage costs.

‘Rising buy to let mortgage rates’

Octane’s chief executive, Jonathan Samuels, said: “Labour’s tenure in government hasn’t gone smoothly so far, and that’s reflected by rising buy to let mortgage rates since its inaugural Autumn Budget.

“Despite the Bank of England cutting its base rate last month, the financial markets don’t seem convinced by the UK’s direction of travel, as higher swap rates have fuelled higher mortgage rates.”

He added: “Combined with the government’s move to increase the stamp duty surcharge to 5%, becoming a buy to let landlord is becoming more challenging, especially for newcomers to the market.

“The hope is that sentiment changes in the months ahead, which would allow the Bank to continue cutting the base rate, and for buy to let rates to fall once again.”

Stamp duty surcharge for BTL landlords

The Budget, which increased taxes by £40 billion annually and raised the stamp duty surcharge for BTL landlords, has contributed to market uncertainty.

Also, October’s CPI inflation rise to 2.3% limits the Bank of England’s ability to further reduce rates.

However, the current rates remain much lower than a year ago, with full repayment and interest-only mortgages down 7% and 22.8%, respectively.

This is despite a 3.7% annual increase in property prices.


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