Despite the base rate rise in December from 0.1% to 0.25%, the average cost of buy-to-let fixed rate mortgages has barely moved, according to Buy-to-let Mortgage Tracker from Property Master.

However, landlords are being warned this is unlikely to continue if, as expected, the base rate goes up again when the Bank meets for the first time this year on 3 February, Property Master said.

The Buy-to-let Mortgage Tracker found that the average rate for a buy-to-let mortgage for a typical loan was as low as 1.69% which, once fees are included, translates into a monthly cost of £262. This was for a two-year fixed rate loan of £160,000 representing 60% of the value of the property  As expected, buy-to-let mortgages with a Standard Variable Rate (SVR) were shown to be the most expensive. The average buy-to-let SVR was 4.77% – up slightly (by 0.03%%) on the cost before the recent rise in the Bank’s base rate although a number of lenders have announced increases in their SVR’s from 1 February.

Property Master said this means landlords currently sticking with a Standard Variable Rate are paying around £596 per month, up to £334 a month more than if they switched to the average cheapest fixed rate mortgage.

Angus Stewart, chief executive of Property Master, said: “The buy-to-let mortgage market is a dynamic one and yet again we have seen how this competition has helped to some extent cushion landlords from the increased costs you would expect to see from a rise in bank base rate, at least for landlords on fixed rates.  The question is for how much longer given that the expectation is growing the Bank will move again in the first week of February.  This could very well be a small window for landlords to bag a good rate before the market moves more decisively into a rising interest rate environment.

“What we can say with certainty is the availability of low buy-to-let mortgage rates has to a large extent obscured the pressures on landlords operating in the private rented sector.  The increasing cost of regulation, higher taxes and the removal of various tax benefits has been able to happen to very little affect whilst finance costs remained low.  If this changes it will hit landlords hard, and we may well see at least the smaller ones deciding buy-to-let is no longer a sensible investment for them.”