In March, the number of buy-to-let mortgages issued for purchase in the UK reached a record low since 2013, with only 4,948 mortgages granted, half of the figure from the previous year. This decline indicates a trend of landlords choosing to sell their properties instead of refinancing when their fixed-rate agreements end due to increasing mortgage costs, making it financially unviable.
Not only are purchase mortgages declining, but remortgages for buy-to-let loans have also dropped to their lowest level in nine years. Landlords facing the expiration of their fixed-rate deals are finding it difficult to afford refinancing, leading them to sell their properties instead. The average interest rate on a two-year buy-to-let loan has risen significantly to 6.02%, almost double the 3.59% average at the beginning of June 2022, according to data provided by Moneyfacts.
Jean Jameson, the chief sales officer at Foxtons, a prominent London estate agent, commented on the situation, stating that many landlords with extensive property portfolios lack substantial equity and are therefore opting to sell. This decision is driven by their inability to afford refinancing.
This rise in mortgage rates is not only affecting landlords but also putting pressure on homeowners. The number of mortgage repossessions has reached its highest point since the start of 2020, as reported by UK Finance. In the first quarter of the year, 1,250 households faced repossession, marking a 28% increase compared to the previous year. However, it is important to note that this figure still remains below the levels seen in 2019, suggesting a slight improvement in the situation. Additionally, UK Finance’s data reveals the first year-on-year decline in savings levels in 15 years.
Eric Leenders, a representative from UK Finance, highlighted that people have been compelled to dip into their savings accounts to cover expenses and maintain their usual spending habits, which explains the decrease in savings levels.
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