Octane Capital’s recent market analysis highlights a 75.7% increase in monthly buy-to-let mortgage interest payments over the past year, while full mortgage repayments have risen by 31.6%. The study examined the current average buy-to-let mortgage cost and its growth due to climbing interest rates.
The average buy-to-let investor borrows £217,364 after a 25% deposit on a UK property valued at £289,819. With an average mortgage rate of 5.32%, investors face a full monthly repayment of £1,312. Over the last year, the average mortgage rate has risen by 2.12%, increasing the full monthly mortgage repayment cost by 31.6%, or £315.
Many buy-to-let investors choose interest-only monthly repayments. According to Octane Capital’s data, these payments have jumped to £964 per month, a 75.7% annual increase, or £415 per month.
Despite rising costs, buy-to-let investment remains robust. The total value of loans issued to buy-to-let investors has increased by 12% in the past year, marking growth in one of only two subsectors for two consecutive years.
Octane Capital CEO, Jonathan Samuels, noted that while increased mortgage costs have reduced profit margins, the buy-to-let sector remains lucrative for investors who choose the right locations and financing options.
