Landlords face crunch mortgage decisions within 12 months

Nearly half of all landlords with a mortgage face a decision over whether to renew their loans in the next 12 months, new research reveals.

Some 40% of residential landlords with a mortgage, whether fixed, tracker, or discount, are due to renew their mortgage rate in seven months to a year, according to research from The Mortgage Lender (TML).

A further 41% of landlords are due to renew their mortgage in the following two or three years.

£615 increase

According to the research, many landlords with a mortgage are currently on a five-year fixed rate (42%), while 21% are on two-year deals.

The figures also show 15% are on Standard Variable Rate (SVR) mortgages, and 8% are on a tracker mortgage.

Those landlords needing to renew their mortgage rate believe their monthly payments will increase by £615 on average.

Increase rent

To deal with higher monthly costs, 30% of landlords have 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 to secure better returns, and 13% are considering converting to a holiday let.

The Bank of England has been grappling with high inflation for well over a year now.”

Chris Kirby, Head of Sales, The Mortgage Lender

TML’s Chris Kirby 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.”

Meanwhile, statistics released by the Bank of England show mortgage arrears increased by 9.2% from the previous quarter, to £20.3 billion, and were 50% higher than a year ago.

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