Monthly interest costs have soared by 283% since 2021 for landlords using interest-only mortgages, while those making a full monthly repayment have seen the monthly cost of their mortgage climb by 71%.

Research by Octane Capital compared a 75% LTV two-year fixed rate buy-to-let mortgage and found that the average available rate has been in steady decline due to the base rate remaining at historic lows since 2009.

It fell from 5.06% in October 2012 to a low of 1.65% in October 2021, just before interest rates started to climb in December 2021. Landlords making a full monthly repayment were paying an average of £804 per month, while those making interest only payments were paying just £272 per month.

Since 2021, buy-to-let mortgage rates have soared from an average of just 1.65% in October 2021 to 5.72% in October 2023 while property prices have risen from £263,333 in 2021 to £291,385 in 2023, making things even pricier for new investors.

As a result, the average landlord is now paying £1,371 per month when making a full monthly repayment, an increase of 71% compared with October 2021. However, those opting to make interest only payments on their mortgage have seen a far steeper hike in costs, climbing to £1,042 per month - an increase of 284%.

CEO Jonathan Samuels says it’s been a challenging year for the nation’s landlords, as mortgage repayments have dramatically eaten into their profit margins, margins that have already been reduced due to a string of legislative changes from the government in recent years.

He adds: “One positive is that buy-to-let rates now seem to be on the slide, after increasing rapidly between 2021 and 2022. With the Bank of England holding the base rate since August, it seems that trend could continue as we move into 2024.”