The rate increase, which will come into place in December, will affect landlords with multiple properties who took out a mortgage through the now defunct West Bromwich Mortgage Company.
A West Brom spokesman said: “The West Brom has advised a number of buy-to-let borrowers who have tracker mortgage accounts with West Bromwich Mortgage Company that their rates of interest will be increasing by 2% from 1 December.
“These changes, which are permitted under the terms and conditions of the accounts, are a reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively.”
The industry has been quick to condemn the move and George Spencer, chief executive officer of property and technology company Rentify, said the move could leave many landlords facing a massive increase in mortgage payments.
Spencer said: “Landlords with West Bromwich Building Society will be reeling from the news that their mortgage rate is set to jump by 2%, even though there has been no movement in interest rates for more than four years.
“This adds a considerable £330 per month to the mortgage payment on a £200,000 loan, which will significantly impact landlords’ profit margins.
“Landlords with the West Brom would be wise to seek independent mortgage advice now and find out whether they can get a cheaper deal elsewhere, rather than wait until the rate hike in December.”
The West Bromwich is the latest lender to increase rates for landlords with the Bank of Ireland having made a similar move earlier this year.
Spencer added: “Landlords with other lenders will be concerned that they will follow suit so it is important to be vigilant.
“Check your rate and if your lender announces it is raising it, it’s time to move to another lender, possibly onto a fixed rate that gives you some protection for a period of time.”