Mortgage rates explained: how the new interest rate increase will affect your buy-to-let mortgage

When interest rates rise, buy-to-let landlords often want to know one thing: will my mortgage repayments go up, and when?

The answer depends less on the headline rate movement and more on how your specific buy-to-let mortgage rate is set—for example whether it’s fixed, tracker, standard variable (SVR) or discounted.

This explainer covers the main buy-to-let mortgage rate types and explains how an interest rate increase can affect costs, lender pricing and remortgaging decisions.

Why interest rate rises matter for buy-to-let landlords

Mortgage pricing in the UK is influenced by several moving parts, including:

• the Bank of England base rate (often referred to as “bank rate”)
• lenders’ funding and hedging costs
• competition in the mortgage market
• how lenders assess risk (including property and rental profile)

When the overall interest rate environment moves up, lenders may reprice the deals they offer—particularly for new lending and at renewal. In some cases, lenders may also adjust the rates they apply to variable options.

For landlords, the key question is usually not “will rates rise?”, but “how is my mortgage rate set?”

The main buy-to-let mortgage rate types (and what changes when rates rise)

Most buy-to-let mortgages fall into one of these broad categories:

• Fixed-rate deals
• Variable-rate deals (including SVR)
• Tracker rates
• Discounted rates (often linked to SVR)

1) Fixed-rate buy-to-let mortgages

With a fixed-rate buy-to-let mortgage, the interest rate is set for an agreed period.

• During the fixed term: an interest rate increase should not change your interest rate or monthly payment.
• At renewal / end of the fixed term: your new rate may be higher if the market has repriced upward.

What to watch: fixed-rate deals can provide stability now, but they don’t remove the impact of rising rates at the point you need to remortgage.

2) Tracker buy-to-let mortgages

A tracker mortgage is designed to move in line with an external reference point—commonly the Bank of England base rate—plus a margin.

• When the reference rate rises: your mortgage interest rate can rise as well.
• Caps and collars: some tracker deals include limits that can restrict how far the rate can move.

What to watch: the effect of a rise depends on the tracker’s margin and any cap/collar terms.

3) Standard Variable Rate (SVR)

An SVR is a variable rate set by your lender.

• When rates rise: lenders may increase SVR, but the timing and scale can vary.
• Timing can differ: some lenders may adjust rates quickly after market movements; others may change at different points depending on internal pricing decisions.

What to watch: SVR can be less predictable than tracker-style pricing because it reflects both wider interest rate conditions and lender policy.

4) Discounted-rate buy-to-let mortgages

A discounted mortgage is typically calculated as SVR minus a discount for a set period.

• If SVR rises: the “minus” discount is applied to a higher SVR, so your rate can still increase.
• When the discount ends: you may move closer to the lender’s SVR (or another rate structure).

What to watch: discounts can soften the impact, but they don’t guarantee repayments won’t rise.

How quickly can an interest rate increase affect your repayments?

Even when a mortgage is linked to a benchmark, the impact isn’t always instant. The timing depends on the contract terms and how the lender updates its pricing.

In general:

• Tracker deals can reflect changes relatively quickly, subject to any cap/collar.
• SVR and discounted deals depend on when the lender chooses to adjust its variable rates.
• Fixed deals usually stay stable until the fixed period ends.

How lenders set buy-to-let mortgage rates during a rising-rate environment

When interest rates increase, lenders may adjust pricing for:

• new business (new mortgages)
• existing variable options (where applicable)
• deals available at renewal

The rate you’re offered (or the rate you move onto) can be influenced by:

• Loan-to-value (LTV): lower LTV often carries less lender risk.
• Property and rental profile: lenders assess rental income and costs as part of their risk and affordability approach.
• Your credit profile: buy-to-let pricing can reflect how lenders view overall risk.
• Market competition and funding costs: lenders reprice as conditions change.

Practical point: even if two landlords have similar exposure to the same interest rate environment, their mortgage pricing can still differ due to lender-specific underwriting and deal structure.

Remortgaging considerations for landlords when rates rise

For many landlords, the most important moment is the renewal point—when a fixed term ends, or when a deal structure changes.

When rates are rising, it can help to consider:

• What happens if you do nothing: what rate type you’ll move onto at the end of your current deal.
• How the new deal cost compares to your current repayments: including the effect on cashflow.
• Whether your mortgage type will change: for example, moving from fixed to variable.
• How lenders may review affordability at remortgage: rental income and ongoing costs can matter when lenders reassess risk.

Practical steps to understand your exposure

If you’re a buy-to-let landlord, the most useful starting point is to identify exactly how your mortgage is set up.

Review your mortgage documentation and focus on:

1. Your current rate type (fixed, tracker, SVR, discounted)
2. Any reference point your rate follows (where applicable)
3. Any cap/collar terms (especially for tracker deals)
4. Your deal end date and what happens at renewal
5. Your repayment budget against your rental income and ongoing costs

This helps you move from “rates might rise” to a clearer view of how your repayments could change and when.

Key takeaways

• Fixed-rate buy-to-let mortgages usually protect repayments during the fixed term, but renewal can bring higher costs.
• Tracker mortgages can rise with the reference rate, subject to deal limits.
• SVR and discounted mortgages may change based on lender decisions, and repayments can increase when variable rates move up.
• Understanding your rate type and renewal point is often the most effective way to gauge how an interest rate increase may affect you.

If you’re unsure how your specific buy-to-let mortgage is likely to respond to an interest rate increase, checking your mortgage paperwork for the rate type, reference point and any cap/collar terms is a sensible first step.