Buy to let mortgage rates have surged sharply since early March, reaching their highest levels in over a year amid ongoing market volatility. This increase is linked to unrest in the Middle East, which has unsettled residential lending markets and led to a reduction in available mortgage products for landlords.

Rising Buy to Let Mortgage Rates

Data from Moneyfactscompare.co.uk reveals that the average two-year fixed buy to let mortgage rate has climbed to 5.40%, the highest since February 2025. Meanwhile, the average five-year fixed rate now stands at 5.91%, a level last seen in January 2024. These increases reflect the broader turbulence affecting the mortgage market due to geopolitical tensions in the Middle East.

Impact on Landlords and Mortgage Availability

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, highlighted the challenges landlords face this year, stating: “Soaring borrowing costs will cause pain to landlords this year, as they join millions of consumers facing higher mortgage repayments.” She warned that rising costs could force landlords to increase rents or reduce the number of properties available to rent if they decide to sell their portfolios.

Springall also noted the disruption caused by the Middle East unrest: “The unrest in the Middle East has caused absolute mayhem in the residential mortgage market, buy to let rates are also being hiked, and hundreds of deals have been pulled from sale.” She added that the positive market sentiment entering 2026 has been shattered, with landlords now facing not only higher borrowing costs but also the upcoming Renters’ Rights Bill.

Fewer Buy to Let Mortgage Products

The rise in rates has translated into significantly higher repayments for landlords. For example, a landlord taking out a two-year fixed mortgage of £250,000 over 25 years would now pay around £1,100 more annually compared to the start of March, based on an increase from 4.66% to 5.29% interest.

Alongside rising rates, product availability has tightened considerably. Since early March, the number of buy to let mortgage deals—covering both fixed and variable rates—has fallen by approximately 1,300. This decline has pushed the total number of buy to let mortgage products below 5,000 for the first time since November 2025, limiting landlords’ options when seeking finance.

Pressure on the Private Rental Sector

Propertymark’s president, Megan Eighteen, emphasised the cumulative pressures on landlords, stating: “Rising buy to let mortgage rates will place significant additional pressure on many landlords at a time when they are already grappling with substantial regulatory and cost burdens.”

She warned that increased borrowing costs combined with fewer mortgage products risk undermining confidence in the sector and could restrict the supply of homes in the private rented market. Ms Eighteen also highlighted concerns about the forthcoming Renters’ Rights Act and potential high costs to meet future Energy Performance Certificate (EPC) requirements, which may prompt some landlords to reconsider their involvement in the market.

Ms Eighteen called for recognition of the combined impact of these changes to ensure landlord investment is not discouraged, underscoring the need for a balanced approach to support the sector’s sustainability.

What this means for landlords

Landlords should prepare for increased borrowing costs that will raise mortgage repayments significantly. This financial pressure may necessitate rent increases to maintain profitability, although this could impact tenant affordability and demand.

With fewer mortgage products available, landlords may find it more challenging to secure favourable financing, particularly those looking to remortgage or expand their portfolios. Additionally, the regulatory landscape is evolving, with the Renters’ Rights Bill and EPC requirements adding further complexity and potential costs.

These factors combined may lead some landlords to exit the market, potentially reducing rental property supply and affecting the wider rental sector. It is therefore crucial for landlords to seek expert advice and carefully assess their financial position and long-term strategy in this changing environment.

Source: Based on reporting from Property118

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TLA update

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