Buy-to-let (BTL) fixed rates have risen sharply across the mortgage market in March due to the conflict in the Middle East, new analysis by Moneyfacts has shown.

The average BTL two-year fixed rate has climbed to 5.29% its highest level since February last year when it was 5.4%, while the average five-year rate has reached 5.63%, its highest level for two years when it stood at 5.91% in January 2024.

Moneyfacts data showed that borrowing costs for those who take a two-year fixed deal are now £1,100 higher compared to the start of March, based on a £250,000 loan with a 25-year term.

Across the market, BTL product choice has fallen sharply, with around 1,300 deals disappearing since the start of March to leave the total count at 4,332 deals. Choice in the BTL market last dipped below 5,000 in November last year.

Finance expert at Moneyfacts, Rachel Springall, said that soaring borrowing costs will “cause pain to landlords this year”, as they join millions of consumers facing higher mortgage repayments.

“This is terrible news, as rising costs could lead to higher rental payments for tenants, or a drop in the pool of properties available for rent if landlords decide enough is enough and sell off their portfolio,” Springall said.

“The unrest in the Middle East has caused absolute mayhem in the residential mortgage market, BTL rates are also being hiked, and hundreds of deals have been pulled from sale.

“The positive sentiment entering 2026 has been shattered, and landlords not only have to face higher borrowing costs, but also prepare themselves for the Renters’ Rights Bill, which comes into effect at the start of May 2026.”

Springall also warned it is possible that some landlords may have to take on an additional loan this year to cover refurbishment costs, to ensure they abide by the Decent Homes Standard set out in the incoming Renters’ Rights Bill.

“It is of course essential that tenants feel safe and secure in their homes, and it will be ever more essential to have a dwelling as energy-efficient as possible with rising costs expected this summer,” she added.

“Thankfully, lots of progress would have been made to make private lets more energy-efficient over the past six years, under the Minimum Energy Efficiency Standard (MEES) regulations, whereby landlords have been prohibited from letting properties with an Energy Performance Certificate (EPC) rating below E.

“However, landlords’ costs will escalate further, as they are expected to invest up to £10,000 as a spending cap to reach an EPC rating of C by October 2030, subject to the value of a property. If that EPC rating is not achieved, landlords could face substantial fines, as the rules apply to all tenancies.”

---