Following the Bank of England’s decision to hold the base rate at 3.75% last week, there is a growing misconception that borrowing costs for landlords will stabilise or fall. However, the reality within the buy-to-let market is far more complex. Recent market expectations reported in the media suggest investors now anticipate two further quarter-point rate increases this year, reflecting ongoing inflationary pressures and geopolitical uncertainty.
Joseph Lane, Founder and Director of leading HMO mortgage brokerage Mortgage Lane, highlights that mortgage pricing is increasingly being driven by lender-specific risk assessments rather than the base rate alone.
“While the Bank of England has held the base rate, this hasn’t translated into stability for buy-to-let mortgage pricing. In reality, many landlords are seeing rates move upwards, as lenders are no longer pricing purely in line with the base rate.
Instead, mortgage pricing is increasingly driven by a broader range of factors, including swap rates, regulatory pressures and overall risk appetite.
Lenders are placing far greater emphasis on risk when assessing buy-to-let cases. This includes everything from borrower profile and portfolio size to property type and rental stress testing.
As a result, pricing has become much more lender-specific. A flat base rate does not guarantee cheaper mortgages, and the difference between lenders can be significant depending on the details of each case.
Portfolio landlords, in particular, should not assume that a held base rate signals wider market stability. Many lenders are actually taking a more cautious approach to exposure in this segment.
This is showing up through higher rates, reduced leverage, stricter stress testing and less competitive terms for certain property types. While the market remains active, lenders are becoming increasingly selective in how they deploy funds.
For landlords operating through limited companies, lender choice is becoming even more critical. Even with a stable base rate, pricing can still increase if a case is viewed as higher risk or if funding costs shift.
The gap between the most competitive and least competitive products is widening, making it essential for landlords to review both their structure and lender fit before refinancing or purchasing.
The impact of risk-based pricing is often most pronounced in specialist segments such as HMOs, MUFBs, semi-commercial properties and holiday lets.
These types of investments are assessed differently by lenders and can see pricing diverge significantly from standard single-unit buy-to-let. In the current market, simpler “vanilla” cases are being rewarded, while more complex properties are attracting higher costs.
Overall, the buy-to-let market remains active, but it is far more nuanced than many prospective landlords may expect. With pricing varying widely between lenders and deals, professional advice and careful planning are now essential.
A held base rate may signal stability at a headline level, but for landlords, the reality is a more complex and increasingly selective lending landscape.”
