Most landlords lock in to fixed rates

Most landlords lock in to fixed rates

Amid continued rate rise speculation the majority of landlords chose a five-year fixed rate when financing a buy-to-let purchase in the second quarter of this year, according to figures released by Mortgages for Business.

The broker released its buy-to-let mortgage index today (26 July) which showed 93 per cent of its landlord customers opted for fixed rate mortgages in the second quarter of this year, with 69 per cent choosing to fix for five years.

David Whittaker, chief executive of Mortgages for Business, said the broker has been recommending five-year fixed rates for a long time.

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He said: "At the moment there is very little difference in pricing between fixed and variable rate products. In today’s uncertain economic climate, particularly the road crash Brexit negotiations, fixing makes a lot of sense, especially as the average price is just 3.52 per cent.

"Why would landlords not make them a part of their business strategy?"

The index also found 20 per cent of buy-to-let mortgage products were fee-free in the second quarter of this year.

Earlier this week, Moneyfacts research showed more than a third of mortgages are now arrangement fee-free - with a total of 2,007 accounting for 40 per cent of the mortgage market in July.  

As fee-free options became more widely available, Mortgages for Business found the average flat arrangement fee decreased slightly from £1,441 in Q1 of this year to £1,389 in Q2.

Elsewhere in the buy-to-let market, The Mortgage Works, LendInvest and Kensington Mortgages joined the group of lenders accommodating landlords borrowing via limited companies - with the latter also adding “top-slicing” to its lending criteria, allowing borrowers to use personal income or income from other properties in affordability assessments.