The latest market analysis by specialist property lending experts, Octane Capital, has revealed that the cost of maintaining a monthly buy-to-let mortgage interest payments has climbed by 75.7% in the last year, with those making a full mortgage repayment each month seeing an increase of 31.6%.
Octane Capital analysed the current cost of the average buy-to-let mortgage and how this monthly repayment has increased in the last year as interest rates have climbed ever higher.
The research by Octane Capital shows that currently, the average buy-to-let investor is borrowing £217,364 after placing a 25% deposit on the average UK property price of £289,819.
With a current average buy-to-let mortgage rate of 5.32%, this would see the average investor pay back £1,312 when making a full monthly repayment.
The average mortgage rate has increased by 2.12% in the last year alone, meaning that the average monthly cost of a full mortgage repayment has increased by 31.6%, adding £315 to the cost of buy-to-let borrowing.
However, many buy-to-let investors will opt to simply maintain the mortgage secured on an investment property by way of monthly interest only repayments.
The figures from Octane Capital show that in the current market, the average interest only monthly repayment has climbed to £964 per month, an annual increase of 75.7%, or £415 per month.
Despite this increased cost, investor appetites for buy-to-let investment remains strong and previous research by Octane Capital shows that the total value of loans issued to buy-to-let investors has climbed by 12% over the last year, one of only two sub sectors to see positive movement two years in a row.
CEO of Octane Capital, Jonathan Samuels said, “It’s not just residential buyers that will have shuddered at the news of an eleventh consecutive interest rate hike last week, with buy-to-let investors also seeing the cost of borrowing climb substantially.
These increased mortgage costs will further reduce a profit margin that has already been dented due to numerous government legislative changes in recent years.
Despite this, we’ve actually seen an increase in the total value of buy-to-let loans issued in the last year which suggests that, despite all that’s been thrown at them, the nation’s landlords are still largely undeterred and the buy-to-let sector itself remains a lucrative one for those looking to invest in the right areas and with the right financing in place.”