Britain’s landlords have collectively seen interest payments on buy-to-let mortgages jump by over a third in less than a year due to higher base rates.
According to estate agency Hamptons, landlords now collectively pay £15 billion worth of interest on their mortgages annually.
This is up by 40% in the past year, by £4.3 billion, and 58%, or £5.5 billion, since November 2021 when rates were among their lowest.
“With mortgage interest often landlords’ largest cost, the pace at which rates have risen has squeezed investors,” Hamptons research head Aneisha Beveridge said.
The Bank of England has lifted base interest to 5.25% through 14 consecutive rate hikes, but opted to hold rates in September following lower-than-expected inflation in August.
Though this marks positive news in terms of steadying the market, according to Moneyfacts analysts, the higher rates are yet to drip through to some mortgage holders waiting to refinance.
“Even if there are no further rate hikes by the Bank of England, we could see the amount of mortgage interest paid by landlords exceed £20bn over the next two years,” Beveridge warned.
This will likely lead to upward pressure on rent prices, she continued, given higher interest could well deter many from buy-to-lets, while eating up more of the incomes of those that stay.