Almost a thousand more buy-to-let mortgages used by UK landlords have fallen into arrears as interest rates rise.
(Bloomberg) — Almost a thousand more buy-to-let mortgages used by UK landlords have fallen into arrears as interest rates rise.
There were 7,030 buy-to-let mortgages where landlords were in arrears by 2.5% or more of the outstanding balance at the end of March, according to data compiled by industry group UK Finance. That’s up from 6,060 at the end of 2022 and from 5,760 at the end of September.
“Where affordability is biting most is actually in the buy-to-let market,” said Nathan Emerson, chief executive officer of trade body Propertymark. “These mortgage products are more expensive, and some landlords are choosing to sell as a result of increasing mortgage costs.”
Britain’s landlords — already facing the prospect of more stringent regulation — are more exposed to pricier mortgages than other borrowers because most are on interest-only deals, which are more sensitive to rate hikes. That’s forced many landlords to sell their properties, with the number of buy-to-let or second home sales hitting a record 47,000 in the three months to the end of November, according to broker Savills Plc.
Within the group, 1,740 were in significant arrears of 10% of the total balance. Lenders took possession of 410 buy-to-let properties in the three months through March, up from 320 in the previous quarter, according to the data.
While a greater number of homeowners has slipped into arrears than landlords on an absolute basis, the number has only increased by 2% from the previous quarter, suggesting the impact of rising rates is softer on homeowners for now.
–With assistance from Tom Metcalf.
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