Landlords may face higher buy to let mortgage rates soon as borrowing costs rise for lenders.
Banks and building societies face a squeeze on margins as interest rates they pay to borrow have gone up.
Lenders base the costs of wholesale borrowing on the London Inter Bank Offer Rate (LIBOR), which has recently increased from 0.83 per cent to 0.95 per cent.
The warning comes as independent money monitor Defaqto researched the buy to let mortgage market and revealed rates and arrangement fees have steadily fallen over the past 12 months.
The cheapest buy to let fixed rate deal from Accord Mortgages at 3.69 per cent fixed for two years at 65 per cent loan-to-value with a £1,495 arrangement fee.
The cheapest buy to let tracker is a lifetime rate set at 3.39 per cent over Bank of England base rate (currently 3.89 per cent) from Bank of China, at 75 per cent loan to value and with a £1,895 arrangement fee.
Clydesdale Bank has the cheapest five year fixed rate at 5.69 per cent with a £999 fee at 80 per cent loan-to-value.
David Black, Defaqto’s banking analyst, said: “For those looking to get into the buy to let market, the last year has seen some positive developments. While interest rates and arrangement fees have reduced we have also seen a number of new lenders enter the market as well as existing lenders expanding their product ranges.
“People should factor mortgage fees into their calculations as, like the interest rate, they tend to be much higher for buy to let mortgages than for residential mortgages, and can make a real difference to the overall cost of the mortgage,” he said.
Meanwhile, Nationwide subsidiary The Mortgage Works is launching a buy-to-let mortgage affordability calculator app for Android and BlackBerry smart phones.
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