The average two-year tracker commercial mortgage for buy-to-let landlords in December 2017 is 2.43% compared to 2.40% in 2016, says a December 2017 MoneyFacts.co.uk article. It is also higher than the 2.23% average rate in November 2017.
According to MoneyFacts, which compiled the figures, the rise is due to the Bank of England raising its base rate from 0.25% to 0.5% in November. The increase between November and December 2017 is the highest increase in one month that MoneyFacts has seen.
The average fixed rate buy-to-let mortgage has risen since November 2017 by 0.4% to 2.93% at the beginning of December 2017. This is below last year’s December average rate of 3.01%.
Charlotte Nelson, finance expert at MoneyFacts, said:
“Just one month after the Bank of England‘s rate rise announcement, it’s clear to see from the latest statistics that many providers have already factored in the increase, with the average two-year tracker BTL mortgage rate shooting upwards.”
She added that the rise in interest rates needs to be factored into landlord’s calculations on expected returns for residential property investments.
Charlotte Nelson pointed out that with savings interest rates remaining low, investing in buy-to-let property can still provide higher returns than savings accounts. She feels that many people will still be tempted to try buy-to-let investing. She urged investors considering purchasing new property to act fast and apply for a commercial mortgage as soon as possible in case interest rates rise even further in the near future.