Most people would agree that 2017 has been a trying year for the buy to let mortgage market. There have been a number of regulatory changes which has impacted on the market but there has also been an increase in the base rate. The November the 2nd announcement by the Bank of England has affected many homeowners in the UK, but studies indicate that the average two year tracker Buy To Let mortgage rate has increased by 0.20% since that time.
A rise of 0.20% may not sound like a lot but this is the highest monthly rise on record. You also need to consider that the large sums of money being paid out on a monthly basis, this level of increase can have a big impact on your bank account or wallet. It is therefore essential that every landlord or investor understands how much money they need to spend each month on their mortgage. This may negatively impact on their rental yield or ability to turn a profit.
When it comes to the average buy to let rates, the two year tracker rates over the past year are on the up overall. In December 2016, the rate was 2.40% but there was a fall to 2.32% in June of 2017 and then a fall to 2.23% in November of 2017. For many investors, this is movement in the right direction but the most recent figure, after the base rate change, sees the average rate standing at 2.43%, a figure up on the year on year comparison.
There has also been similar in the average buy to let rates for two year fixed rate mortgages. In December of 2016, the rate stood at 3.01% and in June of 2017, this had fallen to 2.94%. By November of 2017, the rate was at 2.89% and the most recent figure is 2.93%. This is down on the year on year comparison but it looks as though the rate is heading upwards, so there is likely to be unhappiness about these figures as we move into 2018.
Given that many people and financial institutions expected the Bank of England increases, the change has already been factored into many rates. This wasn’t a change that caught people by surprise but given that there is consensus that there are further increases to come, there will be some concerns about the buy to let mortgage rates in 2018 and beyond.
There are so many factors to consider in the property market that you are loathe to point out one factor as having a huge impact but with landlords and investors paying more and receiving less from buy to let investments, it is inevitable that there will be questions and concerns over what is on offer in the market. You can also see that many tenants are reaching the ceiling of what they can afford in rental payments, so it is not as if landlords have a lot of leeway to increase rental fees.
Demand for rental accommodation isn’t going to diminish but the market is evolving. If you need assistance when it comes to reviewing the buy to let market and finding out what works best for you, get in touch with Griffin Residential.