Five-year fixes most popular with landlords
Landlords’ preference for longer-term mortgage products has overtaken two-year deals for the first time, said Paragon.
The buy-to-let lender found that 48% of applications in the last quarter of 2017 were for deals set at five years or more – a 15% increase on the same period a year earlier.
But as the preference for longer-term fixed products continues to grow in popularity, two-year deals are starting to lose their shine.
Two-year terms have been the preference of landlords over the last five years, but only made up 40% of fixed and tracker cases in Q4 2017, down 14% from their peak in 2014.
Fixed rate mortgage products are overwhelmingly popular with landlords, hitting an all-time high of 91% of all cases. The preference for tracker products reached another all-time low in Q4 2017, down to 7%.
Remortgaging continues to drive the buy-to-let market, with the proportion of buy-to-let remortgages back up to 52% in Q4 2017, continuing a steep rise in remortgaging, up from 28% following the global financial crisis.
The main reason given by landlords for obtaining a buy-to-let remortgage is to get a better interest rate, accounting for 55% of all cases.
John Heron, managing director of mortgages at Paragon said: “The results of our latest intermediary research highlight the overwhelming preference that the market has for fixed rate products and increasingly for longer term fixed rate products. Much of this is driven by the understandable requirement that landlords have for payment stability into the future against an uncertain economic backdrop.”