Thousands of buy to let investors are facing a hike in interest rates, which will significantly increase their monthly mortgage repayments.
Despite Bank of England base rate remaining at 0.5% and with no movement expected by most financial experts for at least another three years, the West Bromwich Building Society has announced an interest rate rise for buy to let investors.
The move means some 6,700 buy to let investors will see their interest rate rise by 2% from 1st December onwards; increasing mortgage payments by around £166 per month on a typical interest-only mortgage of £100,000.
Buy to let tracker mortgages
A tracker mortgage usually pegs the interest rate payable to Bank of England base rate, which has now remained unchanged for over four years at 0.5%.
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However, as margins become squeezed, mortgage lenders are clearly looking at ways of increasing their income and the West Bromwich has now decided to follow the Bank of Ireland, who increased rates for 12,000 buy to let mortgage holders earlier this year.
Commenting on the change, a spokesman for the building society said: “These changes, which are permitted under the terms and conditions of the accounts, are a reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively.”
Critics though have rounded on the West Bromwich, with many accusing the building society of a breach of trust and profiteering from buy to let landlords, many of whom might find it hard to move their mortgage to an alternative lender.
Experts also point to the fact that all banks and building societies are benefiting from cheap wholesale finance as a result of the Government’s Funding for Lending scheme. Whilst also experiencing increased lending levels following the introduction of the Help to Buy scheme, designed to make it easier for people to get a mortgage.
In a similar move, Virgin Money has announced it is also increasing the interest rate its buy to let borrowers will pay at the end of their current mortgage deal. Historically, buy to let borrowers with Virgin Money had moved onto their standard variable rate, currently 4.79%, at the end of their deal. From today though borrowers will be put onto a new buy to let variable rate set at 0.25% higher.
Do you have a buy to let mortgage with the West Bromwich?
If you have a buy to let mortgage with the West Bromwich Building Society we’d like to hear from you.
Firstly, tell us what you think to the news by leaving a comment at the bottom of this article, then get in touch, we might be able to find you a better rate of interest.
Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk
Your home may be repossessed if you do not keep up repayments on your mortgage.
For providing mortgage advice we will charge an application fee of £300 and we may also be paid a fee from the lender, any fee paid by the lender will be disclosed to you. Alternatively we will charge an arrangement fee of 0.5% of the loan and refund to you any payment received by us from the lender.
