Are rising interest rates affecting your Buy-to-Let Investment?

As an investor with a buy-to-let investment, it’s natural to see prices go up and worry about your portfolio. Recently we have seen petrol, energy, and cost of living hit record prices with predictions of further increases ahead. But if we draw comparisons with the past, things don’t appear as grim as they may initially seem. With this in mind, let’s look at the context of buy-to-let investment and paint a clearer picture of the market.

Bank of England interest rates

Since December of last year, the Bank of England has increased its key interest rate from 0.1% to 1.25%. If we look at the past few months, the interest rate was up by 0.25, to 1% in May, and then up by another 0.25 in June, to 1.25%. It is an undeniably quick increase that Bank of England predicts might grow even further. With a review taking place every 6 weeks, we may see another increase by the end of this week. However, a 1.25% interest rate is not that high if you compare it to past interest rates.

Bank of England rates have increased, but they are no match for what they were in the past

It was just over 10 years ago in 2009 that the Bank of England’s interest rate fell under the 1.5% mark. In the early 2000s, it fluctuated around 5%, in the early 90s it was as high as 13%, and the late 70s even saw interest rates of 17%. Looking at this data puts the recent increase in perspective, to say the least.

BoE rates in the 2000s


BoE rates in the 1990s


BoE rates in the 1970s


The Bank of England does not specify how high rates will go, but they do say it is unlikely to reach the heights of the past. In spite of the recent increase, investors can remain calm in the knowledge that the long-term cost of borrowing is still at a historic low.

Competition between mortgage lenders is great for buy-to-let investment

Another key factor in buy-to-let investment is the availability and price of mortgages. In early May 2022, Moneyfacts recorded 3,374 mortgages for investors and landlords. If that doesn’t seem like much, in May of 2021 there were 2,301 deals available – more than 1,000 less than this year.

BTL Mortgages in May 2022


BTL Mortgages in May 2021


These statistics show that there is serious competition between lenders to sell their products. With this many options on the market, borrowers can find great deals, if they know where to look for them.

Rental demand is on the rise

The most reassuring information landlords can look at is the demand, and price, of renting in the UK. Fluctuations in the rental market will inevitably influence buy-to-let investment. Lucky for landlords, the dip that the pandemic caused in rental growth is now in the past. According to Zoopla, in the last year, rent has grown by 11% on average across the whole of the UK. Of course, this varies by area, but even the lowest growth, seen in Scotland, is up by 5.4% from last year.


As renters return to big cities after the pandemic, there is scarcity in the market. This is especially true for areas popular with students and young adults. With an average rent of £995 p/m and 14 days to let out a property, your buy-to-let investment is still safe and profitable.

Make sure you’re getting the best buy-to-let investment mortgage deal

The initial period of many buy-to-let mortgage deals is due to expire in the coming months. With this in mind, it’s time for borrowers to consider re-mortgaging their investments. If you are in this position, you might have already received a letter from your mortgage provider offering you a new deal. Lenders usually send these out around 6 months before a deal expires.

While you may think your mortgage provider is offering you a great deal, you can’t know that for sure. Not until you’ve checked what other lenders offer, at least. If you have the time and resources, you can go about researching mortgage deals by yourself. However, that’s often not the case for landlords who have enough on their plate as it is. Instead of spending days researching lenders, contact a property deal sourcer for advice. They will compile and send a list of suitable products you can choose from.

Prepare in advance to take advantage of opportunities

As we mentioned previously, the Bank of England reviews interest rates every 6 weeks. Their past two reviews have resulted in rate increases and mortgage products have followed suit. Many lenders pull deals from the market to adjust for rising rates. When they put them back on the market, it’s at a higher cost to borrowers. To avoid missing great deals, prepare the documents you need to support your application in advance. These may include:

  • Tax and employment records
  • Bank statements
  • Proof of identification and address
  • Property and portfolio documents

If you’re not sure what you need, book a strategy meeting with us and we’ll help you get ready for all the great deals on the market.