More than 144,000 private landlords coming to the end of five-year fixed deals face re-mortgaging at starkly higher rates in 2024.

The average deal offered to a buy-to-let landlord in 2019 carried a rate of 3.5% but thousands now face rolling onto deals at between 4.5% and 5%, according to forecasts from Capital Economics. For those with a £150,000, interest-only loan, monthly payments could increase by almost £200 a month, or an extra £2,250 a year.

The 35,000 landlords coming to the end of two-year deals will now be hit with a rate rise for the second time since borrowing costs began increasing, according to Andrew Wishart, who runs the housing service at Capital Economics, reports The Telegraph.

A landlord who took out a two-year fix in June 2020 could get an average rate on a two-year fix of 2.59%, according to Moneyfacts. When they refinanced in June 2022, the average rate had climbed to 3.59%.

Far higher

The average rate on a two-year buy-to-let mortgage is now 5.95%, says Moneyfacts, still far higher than the rates available 18 months ago, when the average two-year fix was less than 4%.

By June, Capital Economics expects the average BTL mortgage rate will be another percentage point higher, at 4.6%.

For a landlord with a £150,000, interest-only loan, it means monthly mortgage payments will rise to £575 – £127 more than two years earlier and £252 more than in 2020. However, by the end of 2024, rates will have dropped below 4.5%, Wishart predicts.

Along with being hit by falling profit margins due to tax and regulatory burdens, many landlords faced with higher mortgage payments could be forced to raise rents as they pass on these costs to their tenants.

Photo credit: Shutterstock/PHOTOCREO Michal Bednarek