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Lender Reaction to the Base Rate Increase

Lender Reaction to the Base Rate Increase

Following the latest Bank of England Base Rate increase to 0.75%, how have buy to let mortgage lenders reacted? We look at the latest changes and what this means for property investors.

While the first Base Rate (BBR) increase back in December led to some interest rate pricing adjustments, the latest and more significant rise to 0.75% is producing a flurry of changes as lenders ensure they remain profitable but competitive.

In the past week, at least five key players in the buy to let lender market have adjusted pricing upwards by up to 0.20% in their two and five-year fixed ranges. Pricing from these five now starts from 1.39% discounted for two years at 65% LTV*.

We’ve also seen several lenders remove products from ranges; whether these are replaced with new options remains to be seen. As interest rates continue to rise (experts predict another BBR increase in May), lenders will perhaps wait until the money markets settle before expanding ranges again.

Although the BBR increase is forcing interest rates up, buy to let lenders are still trying to find ways to remain competitive in order to attract business. While some have had to withdraw limited edition rates over the last week, one lender has launched eight limited edition products. Pricing for individual investors starts from 3.44% for two years fixed at 75% loan to value (LTV), and for limited company applicants from 3.64% for five years at 75% LTV*. While the rates may not appear that competitive at first glance, the lender has removed valuation and application fees from this range, and the criteria includes HMOs of up to six bedrooms.

Away from the numbers, some lenders have made reasonably significant criteria changes. In particular, one lender has added expat investors to the borrower criteria, accepting non-UK deposit sources on buy to let and holiday let mortgage applications. There are now 18 lenders that offer buy to let mortgages to expat borrowers. Interest rates in this sector start from 2.35% for a five-year fixed at 75% LTV*.

To find out the most suitable and cost-effective buy to let mortgages for you, speak to our expert team of brokers who will help find you the most competitive deal available. Get in touch by submitting an enquiry, or call our team on 0345 345 6788. You can also search the current rates available on our website by using our buy to let mortgage calculator. 

 

*All rates as at March 2022 and are subject to change.

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE