The average cost of buy-to-let (BTL) fixed rate mortgages favoured by landlords has “barely budged” since the Bank of England (BoE) increased its base rate in December, according to research by Property Master.

The Bank’s base interest rate is currently sitting at 0.25% having risen from 0.1% last month.

However, Property Master suggested that the average cost of BTL fixed rate mortgages is likely to continue at its current level should the base rate go up again when the BoE meets for the first time this year on 3 February.

Property Master’s latest Buy-to-let Mortgage Tracker found that the average rate for a BTL mortgage for a typical loan was 1.69% which, once fees are included, translates into a monthly cost of £262. This was for a two-year fixed rate loan of £160,000 representing 60% of the value of the property.

BTL mortgages with a Standard Variable Rate (SVR) were shown to be the most expensive, Property Master added. The average BTL SVR was 4.77% – up slightly by 0.03% on the cost before the recent rise in the Bank’s base rate, although a number of lenders have announced increases in their SVR’s from 1 February.

This means that landlords currently sticking with a SVR are paying around £596 per month, up to £334 a month more than if they switched to the average cheapest fixed rate mortgage.

Property Master chief executive, Angus Stewart, commented: “The BTL mortgage market is a dynamic one and yet again we have seen how this competition has helped to some extent cushion landlords from the increased costs you would expect to see from a rise in bank base rate, at least for landlords on fixed rates.

“The question is for how much longer given that the expectation is growing the Bank will move again in the first week of February. This could very well be a small window for landlords to bag a good rate before the market moves more decisively into a rising interest rate environment.” 

He added: “What we can say with certainty is the availability of low BTL mortgage rates has to a large extent obscured the pressures on landlords operating in the private rented sector. 

“The increasing cost of regulation, higher taxes and the removal of various tax benefits has been able to happen to very little affect whilst finance costs remained low. If this changes it will hit landlords hard, and we may well see at least the smaller ones deciding BTL is no longer a sensible investment for them.”

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