Buy-to-let bump – What the withdrawal of fixed-rate mortgages could mean for property investment

Adding property investment into a wider portfolio has been a popular option for many savers for a number of years.

However, now new buy-to-let landlords may face a challenge as lenders pull lower fixed-rate mortgage products from the market.

At the end of September, some 37 lenders decided to remove existing mortgage products for buy-to-let borrowers, with more expected to follow suit in future.

This couldn’t come at a more challenging time as the National Residential Landlords Association’s (NRLA) most recent data shows that 31 per cent of those landlords with a buy-to-let product plan to re-mortgage over the next 12 months.

It has been estimated that if interest rates rise to four per cent, then 30 per cent of those with a buy-to-let mortgage would need to divest all or part of their rental portfolio due to it no longer remaining profitable.

NRLA Policy Director, Chris Norris said: “Landlords typically hold interest only mortgages, meaning rising rates and fewer products on the market will cause a considerable squeeze on many of their finances.”

The NRLA says the Government should step in and provide relief for both renters and landlords as “failure to act now will leave an already depleted private rented sector in an even more precarious position.”

With many people investing in rental property as part of their later life plans, they must consider the impact of the current interest rate rise on their portfolio and wider life wealth plans.