Mortgage lender Bank of Ireland, normally known for their exclusive low bespoke rate products have announced that we will soon see buy to let rates increasing across their product offerings. A shock certainly to see this from Bank of Ireland but an understandable change after the recent inflation predictions released by the Office of National Statistics (ONS) yesterday.
Buy To Let Rates Increasing
Yesterday the ONS announced that the UK’s inflation was currently at 8.7%, down from 10.1% last month. To most this might seem like good news….and it is….in a way. Unfortunately though, this inflation figure is still not as low as most people, specifically the Bank of England was hoping for. What could this mean? Well the Bank of England wants inflation to drop to 2%, so the most logical thing that the bank will probably do is increase the base rate again at their next monetary policy committee meeting. It seems that a lot of mortgage lenders predict this too and we are already seeing lenders pre-emptively removing certain products and raising interest rates on other that have previously been reduced.
When the base rate is high, mortgage lenders will increase their mortgage rates to do two things:
- Ensure that they are still making money from the loans they are lending. If a bank lends a mortgage, they will charge interest on top of the loan to make profit on the money they are lending. If interest rates are increased by the Bank of England, the profit margin for the bank becomes narrower so in order to make lending ‘make sense’ the bank must increase their rates.
- To enable lenders to be more selective with their clients and safeguard themselves from lending to individuals who are at risk of defaulting on their loan if they get into financial difficulty. Of course, lenders can’t completely predict who will or won’t be able to pay back a mortgage exactly. But a borrower who can afford a high mortgage interest rate of 6% for example is more likely to be financially resilient than someone who can barely afford a rate of 2%.
Changes To Buy To Let Products From Bank of Ireland
One of the mortgage types that has really taken a beating over the last few months is buy to let. Lenders have particularly targeted buy to let products and buy to let affordability and stress rates recently, making it more difficult for landlords to get a mortgage.
High interest rates combined with a rise in utility bills have forced a lot of landlords to increase their rents just to turn a profit, and some have had to sell their properties because they have been unable to achieve the mortgage that they require. Today, Bank of Ireland announced that they would be making rate increase to all of their current buy to let offering. Here is a breakdown of some of the rate increases:
60% LTV
- 2 year fixed: 4.70% fixed – 7.2% APRC – £995 fee – £0 cashback – Remortgage Only
- 5 Year fixed: 4.54% fixed – 6.3% APRC – £995 fee – £0 cashback – Remortgage Only
- 5 Year fixed: 4.65% fixed – 6.3% APRC – £995 fee – £0 cashback
75% LTV
- 2 year fixed: 4.90% fixed – 7.3% APRC – £995 fee – £250 cashback
- 2 Year fixed: 5.11% fixed – 7.3% APRC – £0 fee – £0 cashback
- 5 Year fixed: 4.65% fixed – 6.5% APRC – £1,995 fee – £0 cashback – Remortgage Only
- 5 Year fixed: 4.69% fixed – 6.4% APRC – £995 fee – £0 cashback – Remortgage
Only - 5 Year fixed: 4.69% fixed – 6.6% APRC – £995 fee – £250 cashback
- 5 Year fixed: 4.79% fixed – 6.5% APRC – £0 fee – £0 cashback
Speak To A Buy To Let Mortgage Broker
If you are a landlord looking to remortgage, an existing owner looking to buy their first buy to let property or have any other questions about buy to let mortgages, please feel free to give our buy to let experts a call today. Our initial mortgage consultation is completely free of charge.
