Property investors are facing “soaring” borrowing costs as war in The Gulf causes “absolute mayhem” in the lending market.

The stark warning comes from personal finance date group Moneyfacts, which points to increased buy-to-let mortgage costs this month.

Two-year high

Average buy-to-let fixed rates across two or five-year terms have risen since the start of March, with the two-year rate at its highest level for a year, and the five-year rate at its highest in two years.

Borrowing costs for those who take a two-year fixed deal are now £1,100 higher, compared to the beginning of this month, based on a £250,000 loan with a 25-year term.

Around 1,300 loan deals have been pulled since the start of March to its lowest number since November.

Soaring borrowing costs will cause pain to landlords this year.”

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk (pictured), says: “Soaring borrowing costs will cause pain to landlords this year, as they join millions of consumers facing higher mortgage repayments.

“This is terrible news, as rising costs could lead to higher rental payments for tenants, or a drop in the pool of properties available for rent if landlords decide enough is enough and sell off their portfolio.”

Mayhem

“The unrest in the Middle East has caused absolute mayhem in the residential mortgage market, buy-to-let rates are also being hiked, and hundreds of deals have been pulled from sale,” she adds.

“The positive sentiment entering 2026 has been shattered, and landlords not only have to face higher borrowing costs, but also prepare themselves for the Renters’ Rights Bill, which comes into effect at the start of May 2026.”

Industry reaction

Megan Eighteen, President at ARLA Propertymark, says: “Rising buy-to-let mortgage rates will place significant additional pressure on many landlords at a time when they are already grappling with substantial regulatory and cost burdens.

“Increased borrowing costs, combined with reduced product choice, risk undermining confidence in the sector and could ultimately restrict the supply of homes in the private rented market.”

“With landlords also preparing for the introduction of the Renters’ Rights Act and facing potentially high costs to meet future EPC requirements, there is a real concern that some may reassess their position and exit the market altogether. This would exacerbate existing supply shortages and place further upward pressure on rents for tenants.”

Emma Fildes, Property Consultant, says: “Landlords facing renewal may find renewed determination to sell as rates climb.

“Many landlords who couldn’t sell or get the price they wanted last year, re-rented their property at higher rates in the hope that 2026 would be a better year to offload. Instead soaring rates are deterring their target market, first time buyers and other investors who aren’t cash rich, leaving them exposed.

“The choice: sell at a realistic price, or feel the squeeze for longer.”

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