Around 40% of landlords with fixed, tracker or discount mortgages are due to renew their loans in the next seven to 12 months, with a further 41% due to renew over the next two to three years, revealed the latest data from The Mortgage Lender (TML).
According to the firm’s research, the majority of landlords with a mortgage are currently on a five-year fixed mortgage (42%), while 21% are on two-year fixed deals.
Around 15% are on standard variable rate (SVR) mortgages, and 8% are on a tracker mortgage — the most vulnerable to immediate changes in monthly payments if the Bank of England decides to change the base rate.
Due to the current state of the BTL product rates available in the market, TML states that landlords who are due to renew their mortgage will likely have to pay more on their mortgage that they currently are or would’ve had to if they had taken out the same mortgage a few years ago.
TML predicts that average monthly mortgage payments for landlords due to renew their mortgages will increase by £615.
To deal with higher monthly costs, 30% of landlords surveyed by TML said they plan to increase the rent of the property, 23% have already budgeted for an increase, while 14% said they would sell the property. A further 14% said they plan to convert the property into an HMO in order to secure better returns, and 13% are considering converting to a holiday let.
Chris Kirby, head of sales for Midlands, south and specialist distribution at TML, said: “The Bank of England has been grappling with high inflation for well over a year now, introducing successive rate rises to drive it down to more manageable levels.
“Although they have had some success in achieving this, there is still a way to go; a rate cut could happen this year, though possibly not until the summer.
“With many due to remortgage this year, it’s important landlords speak to a broker to find the most suitable mortgage for them in order to maintain their property portfolios, particularly as costs of living challenges continue.
“Brokers can offer invaluable support and guidance to help provide a holistic view of what deals are most suitable for clients before they rush into any decisions.”
