"These increased mortgage costs will further reduce a profit margin that has already been dented due to numerous government legislative changes in recent years."
Octane Capital analysed the current cost of the average buy-to-let mortgage and how this monthly repayment has increased in the last year as interest rates have climbed.
The research shows that currently, the average buy-to-let investor is borrowing £217,364 after placing a 25% deposit on the average UK property price of £289,819.
With a current average buy-to-let mortgage rate of 5.32%, this would see the average investor pay back £1,312 when making a full monthly repayment.
The average mortgage rate has increased by 2.12% in the last year alone, meaning that the average monthly cost of a full mortgage repayment has increased by 31.6%, adding £315 to the cost of buy-to-let borrowing.
However, many buy-to-let investors will opt to simply maintain the mortgage secured on an investment property by way of monthly interest-only repayments.
The figures from Octane Capital show that in the current market, the average interest-only monthly repayment has climbed to £964 per month, an annual increase of 75.7%, or £415 per month.
Despite this increased cost, investor appetites for buy-to-let investment remains strong and previous research by Octane Capital shows that the total value of loans issued to buy-to-let investors has climbed by 12% over the last year, one of only two sub sectors to see positive movement two years in a row.
CEO of Octane Capital, Jonathan Samuels, commented: “It’s not just residential buyers that will have shuddered at the news of an eleventh consecutive interest rate hike last week, with buy-to-let investors also seeing the cost of borrowing climb substantially.
"These increased mortgage costs will further reduce a profit margin that has already been dented due to numerous government legislative changes in recent years.
"Despite this, we’ve actually seen an increase in the total value of buy-to-let loans issued in the last year which suggests that, despite all that’s been thrown at them, the nation’s landlords are still largely undeterred and the buy-to-let sector itself remains a lucrative one for those looking to invest in the right areas and with the right financing in place.”
