Buy-to-let mortgage rates could fall slightly soon after creeping up since the Autumn Budget, according to financial experts.

Lender Octane Capital reports that the average mortgage rate for a two-year fixed-rate BTL mortgage (75% LTV) fell from 4.83% in March to 4.22% in October. Last year, the average rate was 4.53% compared to 5.47% seen during 2023.

The latest climb in mortgage rates is largely down to challenges seen by the bond market over the last couple of weeks, says Jeni Browne (pictured), business development director at MFB, following Rachel Reeves’s Autumn Statement and posturing by Donald Trump.

Investing in UK gilts is now seen as a higher than usual risk, and so rates have increased - by necessity - to attract investors. The fallout was a knock-on to SWAP rates and, in turn, fixed-rate mortgages.

Octane Capital CEO Jonathan Samuels adds that with soaring gilt yields, mortgage rates are expected to climb during the start of 2025, although the expectation is that this should subside if the Bank of England decides to cut interest rates again.

“If base rates are held, or even come down, lenders with variable rates linked to the base rate will likely look even cheaper compared to those fixed rates being priced off an increased swap rate and this is where investors should look when assessing their options for the year ahead,” advises Samuels.

Calmed down

The inflation news from last week has certainly calmed things down a little, with calls for the Base Rate to be reduced at the next meeting, so we seem to be over the worst of it, MFB’s Browne tells LandlordZONE.

“As such, the recent uptick in fixed rates will soften, and we will see rates come down a little, but for anything meaningful to happen, it’s going to take some time for confidence to return.”